Economic downturns are a natural part of a world with limited resources. Since preventing economic recessions is almost physically impossible, the best that can be done is to try to stop the causes of the foreclosure crisis. This can be done by placing more strict restrictions on who the banks can offer loans to. For instance, more thorough background checks of financial history and credit, plus a more pessimistic outlook on the progression of the economy will result in le... ... middle of paper ... ...there lesson the first time. For instance, filing bankruptcy removes all debt within reason, kills your credit and leaves you washed up with little to know economic confidence in your future.
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.
The first step in solving the foreclosure crisis is to stop lending money that we cannot afford to pay back. Lenders are greedy and they just push people into loans that are too much for them to handle. Once the lending portion is under control then we must take care of the current problems, which are all the people that currently have the loans that they can’t afford. Stop lending too much money! A person should be able to make the monthly mortgage payment with one and a half weeks to two weeks of paychecks.
It gets even worse when the mortgages are collected in one big money making pile at Wall Street. Then no one pays attention to the possible consequences that can occur. Such consequences include how the original borrower’s income will not be able to keep up with rising prices in the market and the chaos that results when big financial firms loosen money lending requirements for the borrower to expand their market. As... ... middle of paper ... ...g made through a prodigious educational foundation. If we want people to cut down on error and learn how to prepare for the future, things like foreclosure will become the easy problems to solve.
With unemployment levels rising and average pay levels decreasing, more and more families are finding themselves unable to pay their mortgages and hence losing their houses to the mortgaging banks. Because most of these foreclosed properties have become foreclosed not because of bad decisions on the part of the consumer, but rather due to national economic trends, we need to find a way to reduce the number of properties getting ready to be foreclosed. Because foreclosure of properties is such a deep current economic problem, it will be difficult and near impossible to find a quick and easy solution. Yet there are steps that the government and banks can take to make the current situation a little better and avoid a crisis of this nature in the future. Since not all foreclosures result due to the owners’ negligence or reaching beyond their means for buying a property, those creditees that were responsible and in a position to pay some form of payment to the mortgagers should be given the chance to retain their houses by paying what they could.
The government also bailed out failing banks after it became apparent that their current way of lending money was leading to crisis. This bail out meant that the banks were not forced to confront and fix their own mistakes. Thus stated, we are now in a crisis, and must make some changes in our mortgage loan policies in order to help the people who cannot pay their monthly mortgages as well as the banks, who are forced to foreclose and sell the houses at a loss. There are three variables that affect a monthly mortgage payment: interest rate, principle, and term. The banks simply cannot lower the principle, because they would lose too much money for loans to be beneficial to their business.
Those who are employed will be severely affected in case of a rise in unemployment in the economy. Noticeably, reduction in wages and salary leads to decrease in the amount of tax collected on the income. This further hinders the scope of availability ... ... middle of paper ... ...l make the same salary that they had previously. This increases the debt owed by those families. Usually the amount of unemployment benefits is not enough to keep this cycle going.
In order to solve the foreclosure crisis, first we must identify and examine the reasons why people are going into foreclosure. The unstable economy which has led to the loss of thousands of jobs is the most obvious reason that people are foreclosing their homes. Without a stable and sufficient source of income, it is virtually impossible to pay back mortgage lenders. The first step we should take to solve the foreclosure crises is to create more jobs so that people can pay their mortgages on time. Its easier said than done, but who said it would be easy.
The foreclosure crisis is tearing away at this economy causing people to loose their house and be in national debt for long amounts of their life times. More people are filing bankrupt because they can’t afford to pay the adjustable interest rates that they set when signing loans for their houses. Now the economy is at a vast down turn, slowly turning up to becoming better internally, but still people are homeless due to their homes being foreclosed. These people can’t afford to pay these adjustable interest rates. When citizens go into sign papers they are not at a full understanding of what their interest rates are capable of doing and how they are capable of shifting up or down.
When and will the collapse even happen is something that cannot be predicted. We can only wait for it to happen or things might somehow miraculously get better. In the meantime, the incompetent governments will take more loans and put their countries in more debt. People are losing their jobs on a daily basis but food prices are only on the rise. When faced with a collapsing economy, one should stop thinking of wealth in terms of money.