With more lost jobs on the horizon and fluctuating adjustable mortgage rates, the foreclosure crisis continues to plague America. A recent report from the Mortgage Bankers Association reveals that 14% of loans are behind or in foreclosure. This is largely due to lost jobs in this volatile economy. Many factors are involved in addressing a situation like this and one solution alone cannot solve the crisis. We saw millions of dollars in stimulus money go to lending institutions only to be left wondering why the problem is not going away.
There seems to be so many factors to this crisis it makes the head spin when trying to categorize and analyze them all. However, there are major points to be solved that, in turn, will solve the minor ones. First, property values have declined; so many homeowners are left paying a mortgage on property that is worth less than what is owed. Sometimes, much less. Equity built up for children’s college or retirement has been eaten away. The relief period for those with modified mortgages is not long enough resulting in at least half in arrears again after just six months.
Another problem we find within the crisis is government programs failing to live up to their promises. One such government program, Hope for Homeowners, designed to keep 400,000 mortgages from going in to foreclosure, has resulted in an embarrassing 25 refinanced loans. Also, bankruptcy judges are being given new authority to offer relief to homeowners. Good for homeowners, bad for banks. One sided solutions favoring...
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...ce, thus helping the bank with accounting issues and letting homeowners use money they have not gotten yet to help with their payments. Homeowners out of work and in foreclosure will be given extra job seeking help and referrals from state employment agencies. The money could come from the other $1 billion available in stimulus funds and homeowners would have a required eligibility compliance associated with the rules governing the state employment agency.
We can see from this that it will take organization, proper administration and teamwork to see us through the foreclosure crisis. By means of a coalition of affected parties and through the use of stimulus money, specific guidelines for lenders and homeowners, lower interest rates, longer pre-foreclosure grace periods, and tax return diversions the foreclosure crisis can be solved.
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