Proposed Solutions to the Foreclosure Crisis in America
analytical Essay
1749 words
Foreclosure, the process of claiming the defaulted property to cover the cost of an unpaid debt, has hit America like a tidal wave. Considered to be a crisis and a major factor in the poor economic situation of today, there is no doubt that the current state of the housing market and the influx in foreclosures across the nation has had a dire impact on the American economy since the beginning of 2007. Strategies, policies, action plans, and all other means of organizing a recovery have been attempted, but to no avail. Not even Congressional legislation was able to revive the stalwart economy (although the legislation was not specifically targeted toward foreclosure practices or policies). The plain and simple truth is that no matter what the government tries to do, as long as it is attempting to do something, it is directly harming the economy and subsequent foreclosure practices thereof. The best approach is for the government to back out, to stop the destructive and often contradictory policies that have been put into place, and to allow free enterprise and the private sector to revive the economy. Multiple aspects of the foreclosure system are affected by governmental interference, and only by placing a wall as ironclad as the separation of church and state between the government and the economy can these economic woes be eliminated. This is what caused the crisis, but repairing the crisis is a simple fix. Get the government out, encourage living within one’s means, and allow time for the repairs to work effectively.
The first major problem that led to the foreclosure crisis has to do with the availability of loans for housing. While laws such as the 1982 Alternative Mortgage Transitions Parity Act (AMTPA) and the CRA...
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...ven its original state.
Foreclosure isn’t just a problem, it’s a crisis. It has destroyed much of the American economy, and will continue to do so unless resolved. The solution for fixing such a mess is simple, but radical. First, we must eliminate the entanglement of the government in economic affairs. Then we must encourage practices that prevent a person from spending outside of their resources. Finally, sufficient time must be given for the process to react to the changes and to restore the economy to its original condition, or better. If instituted correctly and completely, this process will fix the economy. Unfortunately, it is those we must count on to implement these policies that are also most likely to oppose these methods. Someday, however, someone will realize what needs to be done, and the process they use will look strangely like the one above.
In this essay, the author
- Argues that the current state of the housing market and the influx in foreclosures have had a dire impact on the american economy since the beginning of 2007. the best approach is for the government to back out, stop the destructive and often contradictory policies that have been put into place, and allow free enterprise and private sector to revive the economy.
- Explains that the first major problem that led to the foreclosure crisis is the availability of loans for housing. freddie mac and fannie mae are similar, chartered by congress, but run against the traditional economic grain.
- Argues that the federal reserve is a bank and government institution at the same time. the government controls the sails and freddie mac and fannie mae is the rudder.
- Argues that encouraging leasing as a new trend will help fix the economic problems related to foreclosure.
- Argues that government meddling has persisted since the great depression, and only by fully removing it can we hope to resolve not only the current crisis, but future problems as well.
- Opines that in order to solve the crisis, the attitude of the government towards banks must change.
- Opines that the recovery phase is the simplest part of the whole process, but it must be given time to work.
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- A Practical Solution to the Foreclosure Crisisopinion essayIt is no secret the foreclosure crisis has played a significant role in the financial meltdown of the past year. The collapse of the housing marketing has brought thousands of families across the country to financial ruin, forcing many out on the streets. Although the common consensus is that something must be done to stabilize the foreclosure crisis, the agreement ends there. Proposed solutions to the foreclosure crisis have drawn controversy from all political affiliations and walks of life. This controversy is largely due to the fact that no one can determine for certain, a single factor that led to the housing market meltdown. By carefully analyzing the factors that potentially caused the foreclosure crisis, one can better determine possible solutions to it.
In this essay, the author
- Explains that the foreclosure crisis has played a significant role in the financial meltdown of the past year.
- Analyzes how greed in the mortgage and real estate industries led to foreclosures. homeowners lied about income on loan applications to qualify for a home that they could not afford. banks provided sketchy, adjustable rate mortgages to homebuyers based on their ability to pay only the low, "teaser" rate.
- Explains that the declining value of the dollar is decreasing the purchasing power of americans. the federal government is also robbing homeowners of their own money through inflation.
- Opines that the issue of negative equity must be at the forefront of solution discussions to effectively deal with the foreclosure crisis.
- Describes the factors that contributed to the housing market meltdown and foreclosure crisis and suggests possible solutions.
- Recommends allowing qualified homeowners to reconstruct their mortgages under court supervision. a new law could be passed that would reverse this policy.
- Opines that confidence must be restored in the housing market by strengthening mortgage lending practices and correcting business incentives to make bad loans.
- Opines that loan modification should be improved and made available to more homeowners. tax burdens related to loan modifications must be reduced and legal protection for loan servicers.
- Argues that strengthening oversight of the fha would mitigate the foreclosure crisis and prevent predatory and reckless lending practices.
- Opines that in order for the housing market to fully recover, the dollar's declining value must cease and the issue of inflation must be addressed.
- Opines that alternative energy sources would stimulate the domestic economy, reduce foreign dependence, and increase the value of the dollar.
- Explains that the foreclosure can be looked at in much the same way as a doctor looks at patients. the symptoms must first be analyzed in order to reach the correct diagnosis.
1133 wordsRead More - Proposed Solutions to the Foreclosure Crisisanalytical essayForeclosure is a growing national disaster in the United States. Every time you tune in to your local news, there is a new family whose house is being foreclosed. Every time you ride around the neighborhood, there is another house up for sale. There are several solutions to this increasing trend including cutting government spending and cutting funds towards unsuccessful government programs, devising financial plans to assist families by setting up payment plans that they can afford, getting communities more involved, more stimulus packages, raising the taxes of the wealthy to lower rates, and easing the limits on section eight housing.
In this essay, the author
- Explains that foreclosure is a growing national disaster in the united states. there are several solutions to this increasing trend including cutting government spending and cutting funds towards unsuccessful government programs.
- Argues that cutting government spending and funding to government programs that are unsuccessful would solve a tiny piece of the puzzle. cutting these programs would save essential money that could go towards building new housing projects or funding more programs.
- Argues that if more financial solutions were available to families, they would have more options to choose from and lower rates because of competition between the different companies.
- Explains that communities provide support, compassion, money, food, clothing, and even more to a family fighting for their home. if neighborhoods get together and get their kids involved, these games could benefit that community’s needy families.
- Explains that stimulus packages stimulate the economy by giving random amounts of money to the nation's people so they will have extra money in their pockets to spend on items.
- Argues that a fifth solution to the problem would be an increase in taxes for the wealthier of citizens to lower rent and mortgage rates.
- Opines that easing the limits on section eight housing is the final adjustment that can be made.
- Opines that foreclosure isn't a problem that can be solved with calculators or graphs, but it will take years and loads of hope to overcome this matter.
1052 wordsRead More - The Foreclosure Crisisanalytical essayForeclosure is one over arching problem facing the United States of America today with no one perfect solution. Each person in the US suffering from foreclosure has a unique circumstance and situation that has led them to the economic turmoil they face, and that uniqueness therefore requires any solution to the overall issue of foreclosure to be versatile to a plethora of situations. There is not one faultless way to resolve the crisis, but with a combination of different measures, the foreclosure crisis can be slowed.
In this essay, the author
- Explains that foreclosure is an overarching problem facing the united states of america today with no one perfect solution. each person suffering from foreclosure has a unique circumstance and situation that has led them to the economic turmoil.
- Explains that the current foreclosure dilemma can be divided into two main groups: homeowners who cannot afford their mortgages due to a raise in the rate for an adjustable rate mortgage or decreased home value and those who suffer unemployment.
- Explains that the current economic disaster began as homeowners started to default on their mortgages and the price of homes decreased. the main goal of their foreclosure prevention plan is to keep these homeowners in their current homes.
- Argues that the federal government needs to create a deal with willing and participating banks to keep homeowners in houses. banks would be fairly receptive to this plan since if the homeowner sold or foreclosed on the home before it reached the value of the initial mortgage.
- Explains that the homeowner would also receive benefits if they chose to participate in the government's program. they would have the incentives and the means to remain in their houses and not abandon the homes for foreclosure.
- Explains that although the bank and federal government cover any loss between the original mortgage and the adjusted one, homeowners would have a small fee tacked onto their monthly mortgage payment.
- Opines that a system for the federal government to determine the homeowner's ability to pay modified mortgage payments would be the only requirement and implication of this program.
- Argues that the government should regulate the inclusion of foreclosed home sales when determining the value of a house.
- Argues that foreclosed homes should be placed in a database with an unusual sale price and seasonally adjusted value.
- Opines that the only permanent solution to stemming this segment of the foreclosure crisis is to improve the current economic conditions.
- Argues that the federal government must set up a loan system for unemployed individuals who have lost their job and unable to pay their mortgage.
- Opines that the federal government should offer incentives for united states companies to move more overseas jobs into america for a long term solution to the foreclosure and economic crisis.
- Argues that the federal government should reward firms who can reduce the number of their company’s jobs overseas by a set amount.
- Argues that by holding incentives that would cover at least the expense the firm takes on by employing in america versus overseas, the government could hope production in the united states would increase.
- Opines that there is no single solution to the current foreclosure dilemma, but there are ways to slow its destructive path.
- Cites inslee, jay, and smith, geoff. "there goes the neighborhood: the effect of single-family mortgage foreclosures on property values."
1763 wordsRead More - The American Foreclosure Crisisopinion essayBut this is all well known. The process that led to the foreclosure crisis, the sickly details of the economic crash, and the terms of our recovery have all been mulled over repeatedly. At this point in time, economic recovery still remains as a top priority to the average American. Yet, what hasn’t been decided, or enacted, is how to solve the foreclosure crisis: and in the same vein, how to restore America’s economic tenacity. There must be a combined effort through the three major levels of this crisis – the banks, the Government, and the individual American – in order to stave this crisis in its tracks and start rebuilding a wiser, structured mortgage lending plan that integrates lucidity and sustainability. We must break free of this financial limbo, and finally commit to substantial action in order to solve this predicament.
In this essay, the author
- Explains that the american foreclosure crisis and its subsequent economic recession was caused by lateral misguidance on part of private banks, the federal government, and millions of people who purchased their homes on credit.
- Opines that the process that led to the foreclosure crisis, the sickly details of the economic crash, and the terms of our recovery have been mulled over repeatedly.
- Proposes a solution for the consumer finance protection agency (cfpa), which would be separate from the u.s. chamber of commerce.
- Explains that the federal government will require every bank to include a consumer intelligence certification (c.i.
- Argues that a one-time course created by the cfpa outlines the language of mortgage lending, different loan types, the nature of interest rates and the economic market, as well as the full, arduous process of foreclosure.
- Explains that a c.i. cert is required to take out mortgage loans, which is equivalent to applying for vehicle registration with the dmv.
- Opines that requiring a mortgage-lending course and consumer intelligence certification for all consumers would have two positive effects upon the foreclosure crisis.
- Opines that a c.i. cert will make the mortgage lending process more complex, longer, and take more patience from the consumer and the banks.
- Explains that mandatory classes have been a tactic to ensure the safety of our society. a certification like this ties perfectly with the philosophy of the cfpa, and barack obama himself.
- Explains that the bush administration committed $59,900,000,000 to the bailout of fannie mae and freddie mac in order to "provide needed housing reform"
- Explains that fannie and freddie were fully absolved into the federal government, and their debt has yet to be repaid. the second part of their plan outlines a novel form of repayment to our government.
- Explains that citigroup received 45.7% of the bank industry bailout money, and still owes $25,000,000,000. private banks like this one, along with specialized mortgage lending companies, possessed the largest amount of toxic assets and are the greatest source of increasing foreclosure rates.
- Explains that the government's foreclosure ceiling is a government-mandated limit on foreclosure rates. if citigroup keeps its foreclosure rate below this ceiling, it will be counted toward its repayment and remove 5% of its debt per year.
- Explains that citigroup's debt can be repaid in approximately 20 years, in addition to the interest on its remaining balance per year.
- Explains that citigroup will not be paying the federal government exclusively through dividends, but through the value to the market. if a plan like this was instated, it would effectively end the foreclosure crisis.
- Explains that citigroup is noted for its cooperation with consumers regarding foreclosure, making it an exception in its field. a ceiling program would increase the compatibility of banks with their customers.
- Opines that the second plan is both probable and calculable. it renders responsibility to the consumer, banks, and the federal government, while paving a constructive path towards ending foreclosure.
- Opines that president obama and the united states senate could evolve this two-part plan into legislation to solve the foreclosure crisis. every american citizen deserves a future that encourages smart consumerism, vertical benefits within our economic structure, and lucid loaning processes.
2312 wordsRead More - As the economy drops and foreclosures are on the rise, millions of Americans who were financially stable several years ago are asking the same question, “How could this happen to me?” The crisis has occupied the minds of politicians, who are trying desperately to solve this problem, but the tragedy continues as more and more Americans are foreclosed on with no alternatives. The foreclosure crisis will not be solved by simply lowering interest rates, firing loan brokers, or other short-term, ineffective solutions. The long term solution to the housing crisis has nothing to do with housing. The government has lost its way and needs to redirect the way the whole economy is run.
In this essay, the author
- Opines that the long-term solution to the housing crisis has nothing to do with housing.
- Argues that the foreclosure crisis calls for a drastic solution because the problem has two specific deep roots.
- Argues that foreclosing is a lose-lose situation, as the owner cannot increase monthly payments due to the economic crisis.
- Opines that barack obama wants jobs to stay in america, but his current plan is not efficient enough to keep companies here.
- Argues that renewable energy is the necessity of the future and could drastically reduce unemployment. obama could forgo taxing these up and coming companies until it becomes more economical for them to stay in the u.s.
- Concludes that the foreclosure crisis is not rooted in housing, but in a broken american economic system. more jobs will come by providing more incentives for companies to stay domestic.
- Argues that banks should partner with owners for a brighter future for both banks and owners. the short-term solution to the housing crisis is not to delay foreclosure, but to completely redo the economic system.
- Analyzes how bill clinton's drive to increase homeownership went way too far — businessweek, the wall street journal, wsj.com, and the white house.
1596 wordsRead More - Possible Remedies for the Foreclosure Problem in Americaanalytical essayThe collapse of the American, and subsequent recession, of the world economy has been mired in painful complexity of miscalculations, misunderstandings, and a general overestimation of the prosperity being handed out to insolvent interests at large. Bailouts to credit crunches and Wall Street to Main Street has left banks all over the United States trying to liquidate their assets in order to retain a profitable balance sheet. This, in a macro-level picture, is what has led to the foreclosure of 1,395,044 homes between the beginnings of the economic meltdown in July 2007 and March 2009, (CNNMoney.com) leaving the imagination to fill in the numbers of homes lost up until now. The 780 billion dollar taxpayer tunicate shattered all visions of the celestial “invisible hand” that has guided capitalism for decades, and put in perspective a new flavor of ideology that would mean closure federal inspection of markets and greater federal protection of American consumers and homeowners. However, after a year since disbursement of taxpayer bailout funds, coupled with continuing tightening of credit lines, rising interest on consumer loans, and a steady flow of foreclosures, the problem of families ultimately ending up out of their homes and potentially on the street has the potential force to destabilize American democracy, as it is known, and is a topic requiring considerable analytic width and depth if ever hoped to be fixed and reversed.
In this essay, the author
- Opines that the 780 billion dollar taxpayer tunicate shattered all visions of the celestial "invisible hand" that has guided capitalism for decades.
- Explains that the trend of foreclosures has not curtailed after what was shown to be less of a seven-hundred-eighty dollar taxpayer bailout and more of an handout to credit lenders and banks.
- Explains that the credit default swap is an insurance policy bet whether a debt/loan asset being held, at current time, will default and fail. asset managers overlooking hedge funds heavily “invested” in those otc derivatives markets leveraged their company’s revenues, profits, debts, and loans heavily.
- Explains that credit default swaps and credit linked defaults are composed of a buyer and seller. they have no obligation to be invested in the debt/loan they’re betting success or failure on.
- Explains that the buyer and seller of credit default swaps don't have to be linked to the debt/loan asset being swapped, but there are no rules against it.
- Opines that the spread of this practice to home mortgage loans will cause a fracture to the stability of american democracy once the multi conglomerate banks collapse.
- Argues that the biggest and most influential change to the system would be the heavy regulation of or complete abolishment of the credit default swap in the otc derivative market.
- Argues that a cap on the amount of money allowed to be leveraged against homeowner's consumer debt would allow millions of people displaced from their homes to regain the balance of spending, saving, and working habits.
- Argues that the foreclosure problem in america is one of the most complex and confusing corridors to ever stumble down. the subtle way to fix the problem would be to create a grassroots credit default swap market accessible to homeowners.
2066 wordsRead More - The Foreclosure Crisisanalytical essayThe foreclosure crisis has become a wave, afflicting neighborhoods of every type. This problem must be addressed before it ruins more families, neighborhoods, and bank accounts. There are several things the United States government can do without notably adding to the ever-increasing budget deficit. In the first section of this essay, I will propose following New York’s Governor David Paterson’s method of dealing with the foreclosure crisis. Following that, I will explore alternatives to the Treasury department’s plan to “shame” lenders into doing a better job as well as ways to deal with the paperwork that confuse so many homeowners.
In this essay, the author
- Proposes following new york governor david paterson's method of dealing with the foreclosure crisis.
- Explains that new york is setting an example for the nation. the state saw an 11% decline in foreclosures, whereas there was a 22% increase nationwide over last year.
- Argues that paterson's law should be followed in other states since it prevents people crowding into motel rooms, a health hazard, or onto the street while empty houses sit boarded up.
- Explains that the new law mandates that lenders must cover the costs of maintaining foreclosed properties, which could hurt our crippled economy even more.
- Explains that the new york law requires settlement conferences prior to any foreclosure action to encourage lenders to modify the mortgage rate rather than foreclose.
- Explains that the obama administration created a $75-billion program to reward banks that revise loans for those facing foreclosure, but treasury department officials have seen disappointing results.
- Opines that a federal version of the new york law is better than trying to shame banks into making amends over their predatory lending.
- Explains that the new york law allows residents to remain on the property while the bank assumes their property costs. foreclosures would become a black hole for lenders.
- Explains that the government program, making home affordable, has seen only about 4 percent of homeowners move from the "trial" phase to a permanent loan modification. 30,000 people who entered the program have already been removed because they did not qualify.
- Argues that the government should help homeowners organize themselves and their paperwork and ensure that lenders are not misplacing paperwork or purposely discouraging applicants from continuing the process.
- Opines that a regulatory body that could better supervise their efforts to help homeowners should exist. tales of tax returns faxed four times over, missing receipt disqualifying someone, and multiple requests for the same documentation discourage homeowners from pursuing the loan modification program.
- Recommends that all information faxed over should be immediately scanned and homeowners encouraged to scan and email their documents, receiving confirmation of its arrival while still on the phone.
- Argues that incentives created for banks should be distributed amongst employees who assist most people in avoiding foreclosures. employees would dedicate themselves more to ensuring an adequate loan modification if they received a bonus or prize.
- Argues that kaiser permanente cut costs while motivating its employees who answered patient calls. the government's money would be better used for mortgage support and direct incentives for employees to be more productive.
- Opines that a foreclosure on multifamily residences would be devastating both for these families and the economy.
- Opines that the new york law is proven to have worked and should be applied nationwide. incentives, not shame, will encourage lenders and employees to do a better job.
1425 wordsRead More - Using the Bankruptcy Process to Solve the Foreclosure Crisisanalytical essayPoliticians, policy-wonks, think-tanks, and independent consultants all have proposed various solutions to the foreclosure crisis. In proposing the Bankruptcy Solution, this paper does not seek to denigrate the good intentions of the people expounding these plans. However, in spite of all these planners' best intentions, the foreclosure crisis continues unabated. Whatever the merits of the other proposed solutions, they have not succeeded in solving the crisis. The Bankruptcy Solution is the only plan that is beneficial to homeowners, mortgage lenders, the government, and the general American population. Therefore, the Bankruptcy Solution should be implemented as soon as is logistically possible so that the United States can take the first crucial step towards what will surely be a long, yet successful recovery.
In this essay, the author
- Argues that the bankruptcy solution is the best, clearest, and most comprehensive solution to the foreclosure crisis.
- Argues that allowing homeowners to strip-down their mortgages to the value of their homes will force lenders to raise interest rates so high that home loans will become unaffordable for most americans.
- Argues that the bankruptcy solution is only a temporary solution and fails to understand the implications of its own arguments.
- Argues that judges should not arbitrarily determine the value of homes, thus subjectively determining the amount that homeowners have to repay to mortgage lenders.
2573 wordsRead More - Before the foreclosure crisis can come to a full stop, incomes must come into balance of appropriate home prices. When this becomes an actuality, the problem will be no more and will not be a problem in the future. If more measures are to be passed, the American people and the American government should expect to pay extensively for it and expect to see another catastrophic housing bubble burst a few years from now. As scary and ugly as it is, the only way to tame the beast of home foreclosures is to let the creature die on its own. Government interventionist policy will never kill the root of the problem. It’s time to force the American people and make the American banks reap what they sowed. Then, and only then, will the foreclosure crisis be solved.
In this essay, the author
- Opines that tax cuts, refinancing, and subsidized federal loans can temporarily solve a housing crisis, but it can never take out the roots of the weed out.
- Opines that the government is ready and willing to do whatever it takes to fix the housing crisis and their swift efforts so far should be praised.
- Explains that 53 percent of loans modified in the first quarter of 2008 went bad again within six months. realtytrac and cnn money state that over 3.1 million homes filed for foreclosure in 2008.
- Explains the government's foreclosure prevention act of 2009, which was "destined" for better results.
- Explains why the foreclosures prevention acts of 2008 and 2009 didn't work with total success. human behavior has one trait that the government never put into their calculations.
- Narrates how the sub-prime adjustable rate mortgage (arm) first appeared and the housing bubble exploded.
- Opines that the only way to fix the foreclosure crisis is to let foreclosures rise and fall on their own and start from square one.
- Opines that there's no government intervention that will ever solve the root of foreclosures. tax breaks, subsidization, loan modification, none will get a permanent, satisfactory result.
- Argues that interest rates can't stay low forever, and tax credits will eventually dry up. if we enact more government assistance, what happens when medium-income still becomes too short to pay for high-end houses?
- Opines that people should live in an environment that they can afford, regardless of their income, and that the government should intervene with modified home loans and tax incentives.
- Argues that the only way to tame the beast of home foreclosures is to let the creature die on its own. government interventionist policy will never kill the root of the problem.
1180 wordsRead More - How To Solve The Current Finacial Crisisopinion essayThe financial crisis that is currently affecting the United States of America is the result of several factors, including the growing number of foreclosures, all of which converged into a “perfect storm” of a severe magnitude. The end result was not only the exacerbation of the already looming housing crisis, but the overall bleak outlook on America’s financial system. The integrity of the financial system was put into question along with the future of America’s economy, including its once thriving housing market. In my opinion, I think that like all crises that our great nation has faced, this too shall pass. The question is how quickly will it pass? One of the first steps that we can take toward solving the financial crisis is solving the foreclosure situation that has sprawled across our country. If we can stop the continual insolvency of our nation’s homeowners, then we may be able to reverse the vicious cycle of banks needing to seize a toxic asset, put another loss on the books, packaging this asset either in the form of a bad mortgage or an unwanted property, and putting it on the market so it can collect dust until our economy turns around and an investor purchases it. It is my belief that we can solve the foreclosure calamity by two actions; 1) creating a quasi-governmental agency that will give tax credits to banks entering into a lease-to-buy program for people who are either currently in foreclosure, or those that are about to enter foreclosure and 2) allowing the free market to eventually recoup the losses via the form of investment and spending.
In this essay, the author
- Opines that if we can stop the continual insolvency of our nation's homeowners, we may be able to reverse the vicious cycle of banks needing to seize a toxic asset and put it on the market.
- Explains the concept of a lease-to-buy option, which allows tenants to rent property with the hope of being given the first right to purchase the property at the end of the lease.
- Explains that those facing foreclosure will be able to keep their homes, albeit in a different fashion. this will help them achieve their ultimate goal of home ownership while at the same time not allowing them to "get away with" acting irresponsibly.
- Opines that most lease-to-buy options are created with an average timeframe of several years, so the tenants will have plenty of time to save up enough money to purchase the home.
- Concludes that when our nation faces a crisis, it is everyone's responsibility to chip in and help fix it.
1123 wordsRead More