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.
So we are forced to do it the conventional way by getting a loan. An investor ... ... middle of paper ... ...at will allow the final price closer to the asking price. Now the buyer can afford their new home. There should be more non-profit organization that can assist the struggling home owners to restructure their delinquent mortgage without being charged for it. I have seen and heard many people complain that when they attempted to get assistance from a company that is supposed to get them out of the foreclosure problems they are charged a large fee.
Accidents, identity theft, loss of a job, many things can happen to a person putting them in not only in a bad situation personally but a bad financial situation. Mortgage companies are allowing families to take out mortgages that they may not be able to pay back if something were to happen in their family. There are many different options to consider, but one way to help fix this problem is raising the estimate family income for a mortgage. This would be difficult for some families that are trying to get a more expensive home but it will help them too by avoiding foreclosure. If they were to decide on a cheaper home that would mean a smaller mortgage and less they owe someone else.
The problem with this system is that when the housing market is down, the banks cannot sell the house, and lose money in the deal. When banks lose too much money, they are either bought out, bailed out, forced to fire employees, or close down completely. As a result of the current economic situation, foreclosure is leading to banks going bankrupt; when the economy is doing better, foreclosure is less of an issue. This is because people have the money to pay their house bill when they have steady jobs with decent hours. This is not to say that the economy causes foreclosure, it just leads to it when people make irresponsible choices.
In general, some areas have hot real estate markets (meaning that houses sell really fast), while others have cold markets (meaning that sales are slow and hard, and the area is not as desirable for buyers). Since you’re selling and buying at the same time, ... ... middle of paper ... ...home. If your own resources are insufficient, it’s best to ask support from family and friends. Let them know that you need a short-term loan that will be returned as soon as the old house sells, and offer them guarantees or a small interest rate if needed. If they can help out, family members will most likely not charge you hefty fees or monthly payments.
Banks can increase the interest rates on the homes but lower the payments so that it is more manage able for the home owners. This way, the bank does not have to own the home and have sitting assets that will not bring in income. Although, people we have a hard time paying off the loan with the higher interest rate, the monthly mortgage can be used as rent for the home owners, but the ownership is still kept with the renters. That way the banks do not have to pay taxes on the homes but can hold the home as collateral. If the home owners finally give up on paying the loan, the banks can take ownership on the home once the people leaves.
This may be true in some cases but it is not fair to penalize the mass of people who are not able to pay their bills on time because of the select few who take advantage of the government. Some effects of the foreclosure crisis are due to the loss of jobs, short pay periods, and interest rates. Job loss and unemployment are the main sources for the cause of the foreclosure crisis. Having a job is one of the main resources for paying a mortgage. So the fewer jobs the economy has the more foreclosures will occur.
Collateral would not be allowed. This would direct first time home buyers to get a loan for a house they could afford and prevent false representation of wealth. Misrepresentation of wealth was a huge factor in the fall of the economy. A person would put down false collateral, such as another house or multiple houses, in order to gain another loan. When values fell, their inability to sell the properties caused the collapse.
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 ... ...to 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.
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.