The United States is currently under the hair wrenching burden of a recession in our economy. The past couple of years have been extremely hard on consumers as well as businesses in a way that some people are beginning to compare to the Great Depression of the 1930’s. One area of great hardship is real estate, and homeowners everywhere are in fear of losing their beloved homes. Where many are so accustomed to calling their ‘safe haven’ or ‘home sweet home’ is now becoming a nest of frustration, depression and financial incapability. Americans all over the country are finding themselves unable to make payments for their homes and are therefore losing them and being thrown out onto the streets.
How real is the mortgage foreclosure problem in America? How did it come about? What are some possible solutions? First of all, the problem is so big that almost everyone knows someone who lost their house because of a foreclosure, and this is new. It didn’t used to be that way.
Due to the size and complexity of the US economy, we need to have regulation in place that provides a framework for lending in the housing market. I believe that framework must be two pronged; it must apply to both lenders and borrowers. First, I will discuss how to regulate lenders from the ground up. Loan Officers: In most sta... ... middle of paper ... ...ituation. They will not solve all our problems in six months.
Presently in the United States millions of homeowners are facing the prospect of losing their homes due to bank foreclosure. An event if allowed to occur has the potential of collapsing not only our financial system, but our social fabric as a nation. The unfolding crisis has prompted the US Government to enact aggressive monetary stimulus designed to reverse the downward spiral of home values. Unfortunately this approach has failed to achieve any meaningful results and perhaps has acted more as a red herring to conceal the real issues causing this debt implosion. With billions of dollars being pumped into the banking system why then are banks still timid to continue financing home loans?
For the last several years, the one issue that has been bringing the United States into a state of trouble that it has not been seen since the great depression has been the monstrous Foreclosure problem. Thousands of people have lost their houses. Thousands of people have faced the dangers of debt and chaos. Thousands of people lives have been ruined because of the mistakes that Americans have done in this nation. In order to solve the problem, one must take a look at how it started and how this depression began.
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.
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 fact that the problem festered, under the radar, for so long is further evidence of our collective ignorance. How many thousands of families were used-up and spit-out like ours was, before the problem spilled out onto the national stage? If the nation’s ‘perfect financial storm’ hadn’t torn across the country, would we even be worrying about these foreclosures now? The fact that it did happen, and we are finally paying attention to it and trying to reverse the problem may be the only silver lining. But I digress… To be able to see a reasonable solution to the foreclosure crisis, you have to understand it from the inside, and I do.
I understand we cannot turn back the clocks about twenty years and teach people about borrowing and encouraging them to make smart financial decisions, but I believe it is possible to help those who are currently facing foreclosure. When signing for mortgages people do not always read the fine print and do not know all the clauses and other attachments to their mortgage. Because of this borrowers do not know everything they are signing up for or understand everything they maybe signing. An example would be that all the Balloon mortgages taken out are now causing a problem for lenders because borrowers cannot pay for what they agreed. In order for my solution to work, lenders will supply education to the borrowers who are facing possible foreclosure.
Solving the foreclosure crisis will not be easy. The economic crisis has affected every American, and our government has already stretched itself thin trying to prevent further catastrophe. We must dig deeper however, at least for a short while, in order to save entire cities and regions from complete destruction.