The Failing Credit Industry Influences the Likelihood of a House Foreclosure

The Failing Credit Industry Influences the Likelihood of a House Foreclosure

Length: 1775 words (5.1 double-spaced pages)

Rating: Powerful Essays

Open Document

Essay Preview

A major economic issue in Florida is the growing number of house foreclosures. This supports why “[Florida] has one of the nation’s highest foreclosure rates” (Meek 67). A possible cause behind this could be the failing credit industry because nationally, an increasing number of consumers are being laid off from their jobs, being victimized by identity theft, and are overextending themselves by creating excessive debt. These consumers are struggling to pay back their loan obligations, which can include credit cards, auto loans, and other types of personal loans. For this reason, many consumers are becoming delinquent on their loan accounts. As required by the Fair Credit Reporting Act, which was passed by Congress on October 26, 1970, the lenders report this negative information to the consumer reporting agencies, which are Equifax, Transunion, Experian, and Innovis. Such has a negative impact on the credit bureau scores of the consumers because they can become low, which will cause lenders to view them as high risk borrowers. This may cause lenders to give such borrowers higher interest rates, fees, low loan amounts, and larger minimum payments on their loan products because the borrowers have a high potential of not paying back the loans. Lenders must follow the credit history data they receive from the consumer reporting agencies and take into consideration the income of the consumer to determine his or her creditworthiness, which is the level of reliability in paying back a loan. In the past, lenders were not as strict in determining how creditworthy a consumer was and as a result, they had major losses. For example, from 1990 through 1992, there was a United States loans crisis in which an estimated $125 billion dollars worth...


... middle of paper ...


...re becoming low, which is causing lenders to view them as high risk borrowers. Low credit scores suggest a low level of creditworthiness, which means that the borrowers have a high potential of not paying back the loans. Lenders are giving such borrowers higher interest rates, fees, low loan amounts, and larger minimum payments. They do so with the goal of trying to accumulate as much profit as they can from the borrowers for the time that they are successfully making payments on the loans. However, some lenders are denying loans to high risk borrowers to protect themselves from experiencing a loan loss. The failing credit industry is causing consumers to pay high interest on their loans. For this reason, consumers are struggling making their mortgage payments and as a result, an increasing number of consumers are becoming more likely to have their houses foreclosed.

Need Writing Help?

Get feedback on grammar, clarity, concision and logic instantly.

Check your paper »

Solving the Foreclosure Crisis Essay

- Of every issue facing the American people today, including our wars in Afghanistan and Iraq, our floundering economy, and our troubling health care system, none may be considered quite so frightening as the state of the sub-prime mortgage crisis. While matters in the Middle East and Washington often seem irrelevant and far away, the beast that has evolved out of low interest rates and plummeting housing costs is currently breathing down the necks of Americans in every state, city, and neighborhood....   [tags: foreclosure]

Powerful Essays
2172 words (6.2 pages)

Solving the Foreclosure Crisis Essay

- Upon the news of the 700 billion dollar bailout for Wall Street, on some level, there was outrage among the people. Not that it wasn’t a good thing to save companies that would have likely caused even worse problems for the economy than what already exist, had they been allowed to go under, but the oft repeated question was “While there’s a bailout for Wall Street, where’s the bailout for Main Street?” The common man who’d strived hard his entire life to make an honest living found himself feeling left out of that plan, while large corporations—many of whom engaged in not so ethical practices to propel themselves to the top, also cause their own downfall—seemed to be getting all the breaks....   [tags: Foreclosures, ]

Powerful Essays
1576 words (4.5 pages)

Getting a Grip on Foreclosure Essay

- Many Americans today are watching helplessly as the dream of owning their own home turns into a nightmare. The recession has taken its toll on the American Dream of home-ownership. Some Americans who find themselves falling behind on their mortgage are simply walking away and giving their homes back to the mortgage companies. The neighborhoods of America are cluttered with homes setting empty as a result of foreclosures. We as a nation must find an alternative to home foreclosure that offers hope for homeowners who feel it is impossible to regain control over their mortgage payments....   [tags: Foreclosure, economy, USA, ]

Powerful Essays
1034 words (3 pages)

Foreclosure Crisis Solution Essay example

- Foreclosure is a very sensitive topic and one that almost everyone decides to look up to the tax payers to solve. This is not a feasible option, like tax relief or programs of payment assistance as that only adds to the economy spiraling down and not solving issues for the homeowners. When faced with a person who is going through foreclosure the main concern of the lender is getting their money back. The capital invested in the buyer to purchase the house is ALWAYS secured by the house - but the interest is not....   [tags: foreclosure]

Powerful Essays
768 words (2.2 pages)

Putting an End to the Foreclosure Problem in America Essay

- The American dream is in serious jeopardy today in the United States. No one imagined two years ago that this could happen where hundreds of thousands of homeowners are in fear of foreclosure on their homes, their castles, their dreams. Some had hope that the bailout money to the banks and the emergency measures put into place by the Obama administration would somehow save them, however they have helped too few and the slow economy is pushing even more home owners over the edge of no return. What is to be done to save them....   [tags: foreclosure, economy, financial]

Powerful Essays
1060 words (3 pages)

Essay on Suggested Foreclosure Plans

- Everything was great when I went to bed. My parents weren't letting off a hint that anything was wrong. When I woke up in the morning, one of the officers from the Wells Fargo bank was sitting at the kitchen table. I overheard that savage word, "foreclose." The sound nearly made me wince. He excused himself, apologized for inconveniences, and made his way to disrupt someone else's day. My mother began to cry, and my dad shook his head. The bad economy had hit my family pretty hard. The worst part is that our house was going to be taken away, which obviously meant that I would not be getting a car for Christmas like my parents had promised me....   [tags: foreclosure plans, Obama, economy,]

Powerful Essays
786 words (2.2 pages)

Solving the Foreclosure Crisis Essay

- 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....   [tags: Foreclosures, ]

Powerful Essays
1114 words (3.2 pages)

Essay on Solving the Foreclosure Crisis

- In order to solve the foreclosure crisis it is necessary to understand what caused it and how it developed. After September 11th the government was worried that the already present recession would amplify due to American fear and economic instability. The Bush administration and the Federal Reserve established sharp cuts on interest rates to propel the faltering economy. As a result we saw the lowest interest rates in decades. These low interest rates made it easier and more affordable for people to become homeowners....   [tags: Foreclosures, ]

Powerful Essays
2115 words (6 pages)

Solving the Foreclosure Crisis Essay

- The Foreclosure Crisis is the direct effect of the mortgage crisis that became apparent in 2007, so in order to solve the current crisis we must tackle the cause, not just the symptoms. The issue at the heart of the mortgage crisis is that in most cases the cost of the mortgage has risen above the market value of the home, trapping the homeowner. To solve the crisis both in the short-term and to prevent similar crises in the long-term, steps must be taken to achieve two broad goals: make mortgages affordable by regulating mortgages and mortgage providers and lowering interest rates, and stabilize the market value of homes by increasing demand and decreasing supply....   [tags: Foreclosures,]

Powerful Essays
1923 words (5.5 pages)

Essay about Solving the Foreclosure Crisis

- 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....   [tags: Foreclosures, ]

Powerful Essays
902 words (2.6 pages)