They are faced with nerve-racking and disconcerting circumstances for everyone in the family, including and especially the children. Some may even face homelessness because of it. It also hurts the bank, which looses money and has to extend the time and expense to try sell the house. In this economy selling is difficult and homes sit on the market for long periods of time. Empty houses hurt the community, making it less desirable to live in.
In order to solve the problem, one must take a look at how it started and how this depression began. Around eight-nine years ago, the market in housing caused many people to chase after it. This caused a mistake of creating a domino affect that has hurt banks from lending out the high amount of money to people and finding out they are unable to sell them back because of the ridiculously high prices in mortgages people faced. Which caused banks to crash down because they were never able to obtain their money because the people failed to sell the high price houses they bought with the money. Thus, causing hundreds of people to lose their jobs and if people did not have jobs, they were not able to shop for anything.
The foreclosure crisis has hit America exceptionally hard these past few years especially in California where the housing market is at its worst. California is also the worst because it is home to a lot of the most expensive properties. People are walking away from their homes because they cannot afford the mortgages or loans that they took out on their homes. The lenders are also to blame for this because they did not thoroughly look at them borrower’s credit and income to ensure that they would be able to pay it back. In some cases they would lend money even if the borrower had terrible credit.
But unfortunately we are now in a recession, with more and more people losing their jobs, and being laid off each month. Consumers are not making the money they originally believed that they were going to be making in order to pay their mortgages. So they are defaulting and not making payments and being forced into foreclosure. Consumers can no longer afford to make/pay their monthly mortgage payments. That's why I believe that it is important to start there, and to help out the consumer.
Today, millions of Americans are suffering lost jobs and cut hours because of the recession. Because of this loss, those people cannot afford the monthly bills the bank sends out for mortgages, therefore making people foreclose on their homes. A home is where people live, cook, sleep and sometimes work. If that is taken away, their lives are taken as well. The foreclosure crisis needs to be solved.
Not only are people becoming unable to afford payments on their mortgages but also they are unable to get themselves any help because as opposed to before when they could have refinanced their homes, their homes are now worth less than the loans that they actually need to pay off. So now people’s problems are simply snowballing until they are buried by the result. People have become so desperate for help that foreclosure has become an increasing problem that it is not only affecting the economy but also society. At any time during the day one could see several commercials offering people financial help and advice on how to solve their foreclosure problems. But do these companies actually advertise something that they can deliver?
The foreclosure crisis is a serious problem. Recessions are horrible for society to endure, but when people are losing their homes all around, the confidence in recovery needed to fuel the economy is eroded away until it seems almost hopeless to end the economic slum. Unfortunately there isn’t a simple solution to the foreclosure problem. The best way to solve any problem is to know what causes it. Foreclosure is the result of mortgage loans being given irresponsibly to people that can’t afford them.
Without a source of income, they cannot pay the bills on the house each month. Those who have lent the money to these people are losing money as well and have no choice but to take the houses away from the unemployed people, which throws many out onto the street. This has become a serious problem because so many people have begun to lose jobs and few are hiring. These unemployed people cannot find other jobs and have no way of paying the bills on the houses in which they live. The crisis is a problem that will be hard to fix but that is not to say it is impossible to fix.
Presently in the United States millions of homeowners are facing the prospect of losing their homes due to bank foreclosure. An event if allowed to occur has the potential of collapsing not only our financial system, but our social fabric as a nation. The unfolding crisis has prompted the US Government to enact aggressive monetary stimulus designed to reverse the downward spiral of home values. Unfortunately this approach has failed to achieve any meaningful results and perhaps has acted more as a red herring to conceal the real issues causing this debt implosion. With billions of dollars being pumped into the banking system why then are banks still timid to continue financing home loans?
It’s hard when a home becomes a house: left with walls, stripped of memories. It’s disheartening when a family becomes a number: left with foreclosure, stripped of dignity. In 2007, over-extended borrowers began to default on their sub-prime mortgages; mortgages that increased as more and more families chased the American dream during the housing boom. The interest rates were “teasingly” low, but more detrimentally, they were variable. When mortgage rates were readjusted, homeowners found that they could no longer pay the upped monthly payments.