Solving the Foreclosure Crisis Caused by Slated-Income Loans

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The foreclosure crisis is the result of too many unqualified people getting loans, the result being more money was lent out than what is going to be paid back. This was due to the lifting of restrictions on the mortgage industry to further social engineering. We need to return to sound lending practices as we had in the past (and as practiced in Canada). One of the greatest factors that contributed to the housing crisis was stated-income-loans. A “stated income loan” is a loan given out to a person of an income that is not documented but verbally claimed. This loaning system is poorly contrived, and should be the first thing to be removed. However, the damage of this system has already been done. Much of this reform is already underway. But that alone won’t fix the existing crisis in the housing market/mortgage industry.

Every family involved in this is different and each circumstance unique. We can, however, split the victims up into groups that have been effected the most. There are four general groups that encompass the mass of those affected. 1) There are the builders who have empty houses and condominium units with their construction loans coming due. 2) There are home owners out there who are stuck in a loan without the option of refinancing, due to the decline in the value of their homes. 3) There are people out there who have found that the value of their homes have dropped so much that they have no incentive to stay. And 4) There are the people who simply can’t afford their current house; this could be because they lost their job, or because they were not honest about their income from the beginning. These groups encompass a majority of the victims and each needs to be treated separately to ease the burd...

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... immediate solution, but that they’re putting a burden on the housing market.

Some borrowers will have to be foreclosed upon. However, efforts should be to made to encourage them to take advantage of the above programs. Our hope is to minimize the ongoing damage and to allow the housing market and the mortgage industry to eventually grow out of the crisis. We do this by limiting the burden from the other groups long enough for the housing market/mortgage industry to recover. There isn’t a single solution to make this housing crisis better, and whatever method is applied will take time. It’s important in trying to fix this that we bear in mind these are people, and we’re talking about their homes. The housing crisis we’re facing today is a product of bad policies and lack of foresight, it would be a mistake to try and solve our problem with the same mindset.
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