Ever since the recession we have we experienced a serious economic depression. People loosing jobs that they were going to retire from. A change of location and lifestyle has left thousands of families in America out in the cold. Due to financial hardships homes all over America are experiencing a foreclosure crisis.
In order to improve the situation, we must devise a plan that will benefit the mortgagee and the mortgagor. It is sad to see men and women that have worked so hard, their entire lives loose their jobs and homes. I have come up with a few plans I will be dealing with in this essay. But before I get into these ideas let us deal with what is going on now. The financial institutions are loosing money and they haven’t been working with the mortgagors to come up with a solution to benefit any of them. The mortgagees have been foreclosing the properties in order to satisfy the debt.
I want to elaborate further on this topic. To avoid future crisis in this area a clause can be put in the mortgage contract stating that if financial hardship come, they, which is the mortgagor can receive a six month grace period. That will enable them time to get another job. They can only receive this grace period every five to ten years. In order to prevent the mortgagee from loosing money they will receive the same payments, plus a certain amount of their income tax as well to catch up for the six months that they didn’t make payments. Let me give you a brief illustration. We have a mortgage contract in which it is agreed by both parties that the borrower will pay $1000 dollars a month for a $250,000 dollar home which is all inclusive.. It will take the borrower twenty years and ten months to fulfill this contract. If there is a cl...
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...t rates would be my suggestion. The materials to buy a home may be about $30,000-$70,000 depending on the square footage. I know you would have to pay for labor as well and an inspector to come out and make sure things are done correctly.
The bottom line is if lenders would lower some of these interest rates and are willing to work with the borrowers, I am certain they will make money. If they would add these clauses I suggested it will cause both parties to become more aware of the financial hardship that could occur. Not only financial awareness but also financially ready. They can be ready to eliminate the problem instead of allowing the problem to dominate the situation. The clauses can ensure that the borrower is protected to a certain degree as well as the lender. This way the lender doesn’t have to go find another borrower to pay off the remaining debt.
In essence, the problem leading to the foreclosure crisis is the recent decrease in people’s ability to make their loan payments due to job loss and lower wages brought on by the economy’s weak state. Rather than throw billions of dollars at big banks in the hope that they find ways to help the homeowners’ loans, the government should attack the problem through the individual. Simply, the government aid being spent in the hopes of stimulating the economy should be funneled toward reducing the balance of home loans to make the monthly payments affordable for the owner. By funneling the government aid directly to the American home owner in need, the economy would greatly benefit as homeowners regain their footing with their budget because the economy and foreclosure are directly related. When one hurts, so does the other; when one prospers, the other does as we...
The foreclosure crisis has been devastating. Families no longer able to afford mortgage payments are forced into bankruptcy, while banks find themselves with properties valued at less than the loan principal. Solutions proposed thus far have primarily focused on loan re-modification measures that only slightly relieve the financial burden for homeowners and frustrate lenders who are forced into less attractive loan terms. However, one solution not being discussed in congress may resolve the housing market slump while benefiting families and investors alike.
Foreclosure in America has been a rising and prominent problem recently, and has destroyed many Americans hopes and dreams. Over 2.3 million homes were foreclosed in 2008, and an estimated four million homes will be foreclosed by the end of this year. Despite the efforts of many banks and lending companies, over half of homes will foreclose that have received their help. I believe that we have only started in the right direction in solving the foreclosure crisis. Giving money and lowering mortgage rates will help, but I believe we should find out why Americans are in this situation in the first place. We are being too stereotypical when we think the only reason someone is foreclosing is because of irresponsible payments or buying a home out of a person’s capabilities to pay for it. If we understand their situation, we will be better enabled to help and solve their crisis.
Many years ago the mortgage companies created the thirty year home loan. It seems like this extended payment plan would benefit the homeowner by allowing more time to pay for the mortgage. The payments were smaller and more affordable than those of a shorter loan. But, the long term time frame was most favorable for the corporations. The thirty year loan plan originated due to the banks theory that many buyers could possibly have financial difficulty in the period of thirty years. The lender would also benefit from the interest calculated in this long span payment plan. In thirty years the buyer pays many times the purchase price in order to own the property. And if during that length of time the home is repossessed, the company makes lots of money all over again on the same home or property. This is especially true if the home market values remain stable.