I believe banks should give these temporary grace plans because we would literally be running American citizens... ... middle of paper ... ...e has a part to play in solving the foreclosure crisis, and laziness should not be tolerated. I believe the foreclosure crisis will only continue and worsen until we understand the needs of the American public. Giving money is not the answer entirely. Each situation is unique and different from another. What works for one citizen may not be the solution for another.
I have two ways that we, as citizens of this beautiful country, can help to solve the foreclosure crisis that faces us in these hard times we are experiencing. One has to deal with the foreclosure of businesses and the other deals with home foreclosures. The majority of us are affected by both of these types of foreclosure, which is why I tried to come up with a solution for each. As we know, foreclosure is not just one simple subject that we can get rid of very quickly. It is complex, and will take much time to finally eliminate this issue.
Countries were trying to build back their economy after the world war, and needed a neutral international organization to monetary the economy. The IMF provides a plan guidance and financing to its members who are in economic difficulties and also works with emergent nations to help them reach economic stability and decrease scarcity. IMF policy assumes countries should stick to free trade, but not all countries benefit from free trade .IMF aims to pack up international trade, which is required for stability of goods services in the free trade. A state should have general free trade philosophy. We are also going to discuss how IMF’s decision affects member states that makes decisions who has the most power or most votes.
Furthermore, governments believe that big companies have bigger chance to collapse, therefore by using bail-in approach, the governments could tackle the “too big to fail” problem. A bail-in also helps to ensure that in the future, the taxpayers are not required to bear the burden of the failed bank (Financial Times, 2014). Second recommendation is to apply a wind-down plan to prevent bank from experiencing bankruptcy in the future. By applying a wind-down approach which will not require a tax subsidy over the rest of the financial system, government could protect taxpayers from bailing out’s necessity. Besides that, the wind-down plan is able to inc... ... middle of paper ... ...nce, government need to print more money or raise the government taxes in order to prevent inadequate amount of money to bail out.
To avoid a future f... ... middle of paper ... ...on and deflation. This constant pattern is the fix for our free market economy and should never be changed. As described above, the current foreclosure crisis is a complex matter with both social and economic factors.We need to spend less time on repairing a “fixed” system and focus on assisting those who are in jeopardy of losing their homes. Lending institutions need to take steps to make better lending decisions and lenders should take steps to develop relationships with their consumers, whereby consumers consider them trusted advisors. Consumers too need to make better borrowing decisions and take personal responsibility to do their best to ensure that they protect themselves from a downturn in the economy.
Due to the recent economic downturn, it has become obvious that the government of the people must act swiftly and effectively in order to curtail the foreclosure rate that is hitting lower and middle America. Because the money that is going to pay towards relief from foreclosure agencies is money that will never enter into the American production system and stimulate growth, it is imperative that direct help be made. I support the plan of a direct debt relief program to all Americans who are facing foreclosure due to inflated adjustable rate mortgages or who are facing foreclosure due to a spike in costs of other sectors of business, such as healthcare or cost of living. I would not support bailing out the people who have not already taken actions upon themselves in order to attempt to self alleviate the crisis. According to an article written by Glenn Setzer for the Mortgage Daily News entitled Foreclosures Cost Lenders, Homeowners, the Community, and You Big Bucks published on June 2nd of 2008, the average foreclosure costs $77,935, while the average cost of avoiding foreclosure is $3,300.
With foreclosures, investors loose money and cannot afford further investments. With fewer... ... middle of paper ... ...ney matters. It is better to wait and force yourself to save enough to be ready and able to buy a home. Then you can live contentedly knowing that you can pay for it and not constantly fear foreclosure, uprooting your family and the possibility of becoming homeless. I also think a law should be passed about the degree to which a bank can vary from the prime rate, and should include a formula of basic borrower qualifications to help keep this crisis from continuing as more homes are sold in the future.
Second we are loaning the money out using a system similar to FAFSA why not use the same lenders on that list with the same terms. The interest rates should be better considering the loans are for secured mortgages and not student loans. Payback percentages should be higher since they still have a chance of being foreclosed on. This program should help a large number of people facing foreclosure. With any kind of luck some of the other problems that helped get us in this mess will also get fixed.
There may not be an easy way to fix this economic crisis, but there is a wrong way. Masking and covering up the debt with more debt is not going to replenish the money flow. Dispersing the debt helps, and it can give the economy more time to replenish its resources, before all the “I owe yous” are due. I strongly believe that this three step plan will work. In addition to being effective, it also puts more power into the hands of American Citizens, the banks and the Government, by sharing the responsibility and conquering this debt.
If the consumer understands ahead of time the terms and conditions, they would probably not go into a loan that they would not able to afford. Incentives should be given to the bank after a period of time where they would be able to get a bonus is a person qualifies for the loan based on their income and if they keep making payments on their loan. This incentive would probably encourage banks to work with their customers and offer them a more competitive loan. The banks should offer a standard interest based on income and credit score. This standard rate should be equal across the United States.