Although the insurance is used to help the mortgage company in case of default, it can be an unnecessary burden on the homeowner. The elimination of the insurance will reduce the payment by a minimum of $100 each month. That will help the homeowner tremendously in both the short and long term of the loan. Finally, the lenders should make sure the homeowner can afford to pay for the house they are interested in. So many people were placed in houses that were well above their means but because of greed this has caused a lot of people to lose their homes.
When these basic items are in jeopardy mortgage payments often suffer first. The reality is that no one is going to pay their mortgage if their children are cold and hungry. The decline in the value of the American dollar has also been mentioned as a reason for the mortgage crisis. Parallels have been cited between what is happening now and what happened prior to the Great Depression. Inflation has robbed too many homeowners (and non-homeowners) of their savings, making the money they do have of little value.
As the housing market fell, the banks no longer offered the refinancing that these borrowers counted on, and other economic issues caused many of them to be on even less firm footing then when they got their mortgages. Foreclosing on homes that are unsellable in a slow market helps no one. Foreclosing on a home is devastating to the owners. They not only loose their home, but their families are uprooted. They are faced with nerve-racking and disconcerting circumstances for everyone in the family, including and especially the children.
When thinking of a solution to the foreclosure crisis our country now faces, we have to analyze how this all started. People cannot afford their mortgages, and since their house is worth less than they are paying for it, now that the housing market has plummeted, why not just let the bank take their house rather than paying? The smart economic decision their by the homeowner would be to let the bank foreclose on their house and look to buy another for much cheaper. That is the problem. Due to the severe decline in housing prices, people who bought their house about five years ago are paying more than the house is worth.
Millennials grew up in a highly unstable economy. Their afraid to choose incorrectly and be stuck in a commitment that doesn’t work out at such a high cost. Most Millennials are still paying off debt from school, and adding to it in order to buy a house does not seem reasonable in their minds because things could go wrong. Also what about Millennials that did not go to school? They are either living at home still or working a ton and paying rent.
Without a steady supply of funds, these newly unemployed people could no longer pay the mortgage bills on their homes. Unable to pay the mortgages, homeowners began selling their properties and placed their homes on the housing market. This influx of on-sale homes swelled the market and enlarged housing supply. As supply increases, value of houses decreases. The value of these properties dropped so much that many home owners lost their down payment and could not pay the mortgage balance.
To their (loan officers) dismay they will most likely end up having to pay back that money or be at risk of loosing their jobs due to banks closing. If these citizens were actually shown what these loans will do throughout the loans lifetime (all the ups and downs of the interest rates) then they might not sign up for them, knowing they will not be able to pay the adjustable interest rates that banks rise and drop ever so often. Due to these loans not being paid back the bank has to take their houses and now they are out of thousands of dollars, left with hundreds... ... middle of paper ... ...ld teach people what they are signing into, so that they know what they will be able to pay at a constant. Fixed interest rates for all loan seekers (to me) have become vital to solving the foreclosure crisis. This is how the crisis shall be solved to me.
His original house payment was say $1800 including taxes and insurance. But obviously he can no longer afford the payment. Instead of forcing this customer into foreclosure and the financial institution having a home on their hands, which will be appraised at a much lower price not to mention costly repairs, why not give the homeowner a Start Over Loan. The Start Over Loan will take his remaining balance of $130,000 with an interest rat... ... middle of paper ... ... allow working Americans, who still make the attempt to repay their debts as best they can, the dignity of remaining in their homes. As a young person about to face the world as an adult, I can’t help but fear the issues still lie ahead.
When the housing market crashed subsequently the stock market crashed soon after it. As a result of both the real-estate and the stock market crash the banks opted out to tighten up their belts by increasing the criteria to apply for credit and loans. For most Americans who have or had middle class to poor income status it is almost if not impossible to apply for and receive credit now from a reputable bank institution. The foreclosure rate is exceptionally important to me because my family and I were considering buying a home in a year and we almost considered purchasing a house on the flex or adjustable rate. The thought of the possibilities of losing a house would devastate us because we have a young child and my husband and I just started our lives together.
The current foreclosure crisis that our nation is experiencing has become a great hardship on many people in America. People that have lost their jobs due to cut backs, people with families for whom they need to provide shelter, people who are otherwise very responsible but have been put in a position from which they cannot escape, these are the people that are suffering. Normally if one could not afford to make payments on their mortgage, there would be ways for them to refinance their mortgage in order to adjust some of the payments. With this current foreclosure problem, this seems almost impossible. 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.