More Than Housing: A Double-Ended Approach to the Foreclosure Problem in America

More Than Housing: A Double-Ended Approach to the Foreclosure Problem in America

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As the economy drops and foreclosures are on the rise, millions of Americans who were financially stable several years ago are asking the same question, “How could this happen to me?” The crisis has occupied the minds of politicians, who are trying desperately to solve this problem, but the tragedy continues as more and more Americans are foreclosed on with no alternatives. The foreclosure crisis will not be solved by simply lowering interest rates, firing loan brokers, or other short-term, ineffective solutions. The long term solution to the housing crisis has nothing to do with housing. The government has lost its way and needs to redirect the way the whole economy is run.
The reason why the foreclosure crisis calls for such a drastic solution is because the problem has two specific deep roots. The first root could have been avoided easily. One original problem for this crisis is the people who were not in a financial position to buy homes in the first place, but did so anyways. Somehow the banks got blamed for all this; however, it was faulty government policy that was to blame. During Clinton’s second term, the government encouraged banks to loan to those who were previously unqualified. Banks prior to this had set standards on income, credit FICO scores, expected future income, and other standards required to prove prior to loan acceptance. Although the banks advised the federal government that these requirements were in place for a reason, the government insisted that the standards be lowered to include previously unqualified buyers, or subprime loans. The 20% down payment was replaced with 0-3%, which nearly guaranteed that anyone could qualify for the original loan. [1] The more money a person invests into ...


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Works Cited
1. Bill Clinton's drive to increase homeownership went way too far - BusinessWeek." BusinessWeek - Business News, Stock Market & Financial Advice. Web. 29 Dec. 2009. .

2. "The Change We Need - WSJ.com." Business News & Financial News - The Wall Street Journal - WSJ.com. Web. 28 Dec. 2009. .

3. "Remarks by the President on Job Creation and Economic Growth |." The White House. Web. 29 Dec. 2009. .

4. "Why Subprime Lenders Are In Trouble." BusinessWeek - Business News, Stock Market & Financial Advice. Web. 29 Dec. 2009. .


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