Solving The Foreclosure Crisis

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Thousands of homes are currently facing foreclosure for a multitude of reasons, but some of the causes of these foreclosures could have been prevented. People took their credit cards and lines of credit on their houses for granted, and never attempted to pay them off. These loans and credit card bills require only a very small percent of the principle be paid back each month, and people simply pay the minimum and keep themselves in debt. Because people borrowed money against the value of their homes and used this money to buy more homes, they invested everything they had in the housing market. When the housing market began to fail, a huge foreclosure crisis arose.

There are many things that must be done in order to fix the current foreclosure crisis. Banking institutions must first begin to check the credit and finances of people applying for loans. Banks could also consider changing the interest rates on the home loans of some people. Another option is to allow some of the people who have far overstepped the range of their finances to default on their loans instead of spending even more money trying to bail them out of their loans.

The Banking industry must begin to check much more closely into the finances of the people to whom they are considering loaning money. Not everyone is qualified to receive these loans, and they should not be loaned money that they have little chance of repaying. Contrary to the opinions of many politicians, not everyone can own a home. Some people can simply not afford to buy a home, and these people must be screened out during their evaluation to keep the bank from having to foreclose on them in the future. Although banks want to lend money to these people so that they can make money on the ...

... middle of paper ... these people and to the market would be far less than the long term problems that will be caused by the government or the banks intending to bail them out of the debt they incurred. The government and banks cannot afford to bail out everyone who is in debt so some of them must have their homes foreclosed. The banks cannot wait on for people to repay the loans on several homes at a low interest, long term loan. They simply must foreclose on some of these homes and hope to make some of their money back in the sale of these homes. This may be hard for these people, but in the long run it will serve as a lesson on overspending, and it will help keep more people from making these same mistakes after they see what has happened to the other people who did this. This is a harsh way to look at things, but long term it will be better for both the people and the economy.
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