If they were to decide on a cheaper home that would mean a smaller mortgage and less they owe someone else. The sooner a person can get out of debt the better because you never know what is going to happen. Like I mentioned earlier, accidents and identity theft happen all the time and you never know if or when they are going to happen to you. Nothing is worse than being in debt and not having a source of income. The government has set up programs such as HUD homes for families that are less fortunate than others.
One of the major issues in our economy is the issue of foreclosure. With our rapidly dropping economy keeping a home is a difficult task for many home owners. Also with the increasing unemployment rates, many people are losing their jobs, and no house payment can be kept up with only an unemployment check. There are many existing ways to decrease the occurrence of foreclosure but also many ideas that have not been heard. Foreclosure is an unfortunate reoccurring incident that some how some way must be taken care of.
The frequency of foreclosure in our nation today is dangerously high. The strain from the recent economic downturn has put many families and individuals in a financial chokehold preventing them from being able to make their monthly mortgage payments. Consequently, many of these people feel they’ve punched a one-way ticket to foreclosure. With all these homes being foreclosed on, we face a very real crisis. The best way to solve this foreclosure crisis is preventing homes from foreclosing one house at a time.
Overall, President Obama has a good start for solving this crisis: help people refinance their homes and set limits to the size of their payments so that they are able to actually pay off their loans. The best thing to work on from there is what to do with the loans that are through independent lenders, instead of government run lenders like Fannie Mae and Freddie Mac. Instead of allowing these companies to selfishly hurt their customers more than they already have, the government should simply provide a way to take over those loans so that those people can also receive the large amounts of help that the government is providing.
The credit score is the reason a lot of people are not able to refinance their homes. The credit score should not be the determining factor. Other factors should include the longevity on the job; the ability to pay the loan at a lower amount; a lower interest rate; consolidating other debt with the mortgage loan and converting ... ... middle of paper ... ...n afford to have it placed on the loan at the onset. The Private Mortgage Insurance (PMI) should be eliminated after the homeowner has made payments on the house for two years. Although the insurance is used to help the mortgage company in case of default, it can be an unnecessary burden on the homeowner.
This is a special circumstance—it is a crisis. This shouldn’t be expected to happen every day just because a property value goes down, but this is a rare instance where America needs help! After implementing this program, banks can then reduce the number of interest rate and payment modifications, short sales and deed-in-lieu approvals. Homeowners having difficulty will be able to sell their homes to more buyers. Currently, in order to get out from under a home that one cannot afford, he must attempt to do a modification to make the payments easier to afford.
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.
Empty houses hurt the community, making it less desirable to live in. Also, when banks loose money from foreclosure, they pass on the expense to new borrowers, making it harder to afford houses in the community. The economy in general is hurt by foreclosure because debt is a commodity which is sold and incorporated into investment packages. The idea is that when the debt is repaid, the interest paid on it is the financial incentive for the investment. With foreclosures, investors loose money and cannot afford further investments.
The foreclosure crisis is a serious problem. Recessions are horrible for society to endure, but when people are losing their homes all around, the confidence in recovery needed to fuel the economy is eroded away until it seems almost hopeless to end the economic slum. Unfortunately there isn’t a simple solution to the foreclosure problem. The best way to solve any problem is to know what causes it. Foreclosure is the result of mortgage loans being given irresponsibly to people that can’t afford them.
The solving of this foreclosure crisis that is now plaguing our economy and our people involves examining the past, taking important steps in the present, and changing our policies and our thinking for the future. Perhaps the greatest cause of this incredible problem was our nation’s lack of foresight. The country did not dream that the values of houses and properties would decrease so drastically, and thus we treated the buying and selling of houses as something that was almost insured, stable, and guaranteed to continue to rise when it clearly is not. Many consumers were approved for mortgages with minimal proof of ability to pay it back. The government also bailed out failing banks after it became apparent that their current way of lending money was leading to crisis.