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Restructuring Foreclosure Practices

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Well the rates of foreclosure have decreased significantly since the peak in the 2008 housing market. The reason? Banks and lenders have learned their lesson and have set stricter guidelines in order for people to be approved. Banks are now looking at credit scores, possible collateral for the loans rather than making quick money off high interest rates and bogus approvals. The foreclosure rate is still a big economic problem, not to mention the increasing unemployment rate. The unemployment rate has reached nearly 11% this year due to bank failures like AIG, JP Morgan, and Goldman Sachs, which have really hurt the economy. To add onto that, American car companies like Ford and General Motors have gone into bankruptcy which have depleted the number of jobs available in the United States. People are losing their jobs, have come up empty when it was time to pay the mortgages. Sadly, they are sunk in debt and can’t find work in order to support their families. Too many people are becoming victims in this cruel economic time and losing their homes.

My proposal to fix this problem, is to restructure the foreclosure practices that banks are resorting to. The reason banks do it? Banks have investors they need to please; they have annual reports to publish to the public. They are pressured just like every other public traded company to produce good results to satisfy investors. They have to cover their losses somehow and maintain a reputable image. All of the faulty loans issued in 2006 with high interest rates produced a quick profit, at the borrowers expense. Their income reports were off the charts as they were approving loans left and right. From a short term perspective, they cashed in on the real estate craze. However, by 2008, all...

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...e for a family with two working parents totaling an income of $80,000 to afford. It’s a win-win situation now for both sides; the banks get their money and the family gets to keep their home.

As for the increase in the unemployment rate, I propose the banks/lenders give the home owners a three month moratorium or period of leniency. The banks will agree not to foreclose upon the property and let the home owner try to get back on their feet. Three months is reasonable amount of time to find a new job. The missed mortgage payments will be paid back in installments on top of the normal monthly payments until the home owner is caught up. It is so powerful an incentive for the home owner not to lose their house and keep the payments coming along. The economy would be running smoothly as people are not forfeiting on loans and jobs are not being lost due to bank failure.
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