They are faced with nerve-racking and disconcerting circumstances for everyone in the family, including and especially the children. Some may even face homelessness because of it. It also hurts the bank, which looses money and has to extend the time and expense to try sell the house. In this economy selling is difficult and homes sit on the market for long periods of time. Empty houses hurt the community, making it less desirable to live in.
This solution will help solve many of the problems such as people buying houses they can’t afford and contractors offering high sales rates. It will also help families like may aunt who move several times just to get a place they can afford. It will also help many people save their homes and keep them from being homeless. The majority of the nation’s problem in this foreclosure crisis is that people are buying houses that they cannot afford. Everyone knows that when it comes to buying a house for the first time that it’s a major accomplishment for him or her, but some people in the nation do not seem to consider their salary when it comes to buying a home.
This year, the rate of foreclosure has increased from a problem into a crisis, and it is of increasing importance that the problem be solved. More and more Americans are loosing their homes as unemployment rates rise and it gets harder to pay the bills. High foreclosure rates cause homelessness to rise and banks to struggle. Since home loans are secure in the fact that if payments are not made, the bank can take the house, also called foreclosing it, the bank is less at risk. The problem with this system is that when the housing market is down, the banks cannot sell the house, and lose money in the deal.
So the fewer jobs the economy has the more foreclosures will occur. Foreclosure crisis is a very important issue that has affected over millions of people in America. It has caused many people to lose their homes and jobs. With the help of the suggestions listed above on how to solve the foreclosure crisis, it will decrease the foreclosures in America. =
Accidents, identity theft, loss of a job, many things can happen to a person putting them in not only in a bad situation personally but a bad financial situation. Mortgage companies are allowing families to take out mortgages that they may not be able to pay back if something were to happen in their family. There are many different options to consider, but one way to help fix this problem is raising the estimate family income for a mortgage. This would be difficult for some families that are trying to get a more expensive home but it will help them too by avoiding foreclosure. If they were to decide on a cheaper home that would mean a smaller mortgage and less they owe someone else.
This problem gives us the opportunity to fix a system that is in desperate need of overhaul in order to help people from all economic backgrounds. First, sub-prime mortgage lending practices must cease. This program has allowed people to purchase homes they simply cannot afford. Buyers must evidence a steady flow of income, show a high credit score, and the ability to pay off debt. Loaning substantial amounts of money to people who have no way of evidencing that they are capable of paying off loans is a reckless practice.
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.
It is clear that the foreclosure rate in the U.S. is a problem that has not been resolved with the recent Stimulus Act and other measures taken to correct the problem. The root problems of the foreclosure crisis are consumers buying a home they cannot afford, decreasing neighborhood home values, home owners who have not planned for emergencies and unexpected expenses, refinancing homes to make unwise investments or cover increasing debt, and lastly banking lending practices. Implementing solutions that support education, responsibility, long-lasting results and proper banking regulation will help to correct the foreclosure trend. Everyday consumers are purchasing homes they cannot afford. Looking to impress friends, family and co-workers and give the image of success is very popular among American culture.
The government has to take steps in regulating these types of entities and not be looked upon as the factor of salvation in saving the banks and mortgage industry. The first suggestion to solving the problem of foreclosures would be to lower the mortgage interest to 4% across the board. This would give more people the ability to stay in their homes instead of the adjustable rate mortgage that they are now enduring which ultimately puts them into a situation where they cannot afford their monthly mortgage payments. Banks are greedy and by not giving the homeowner the above chance, they end up taking back a home under foreclosure ruling and in the end, lose out as they do not recoup the value of the home and it puts everyone in a no win situation. Based on mortgage interest rates, many first time home buyers do not realize the impact that the monthly payments will have on their net income.
In some areas of the country, the homeowners’ are as much as 65% upside down. The Mortgage Bankers Association reports that there will be a significant increase in prime-fixed rate mortgage defaults, as the economy struggles with increased number of job losses expected. This does not even address the looming commercial property loans that are delinquent. Although the mortgage crisis seems to have started with the “sub-prime” loans and the loose lending practices, it has had a much deeper impact on the over-all US and world economy. As people lose their jobs or experience a slowdown in business and decrease in their household incomes, it is harder to meet their financial obligations.