The Root Of The Housing Crisis Essay

The Root Of The Housing Crisis Essay

Length: 959 words (2.7 double-spaced pages)

Rating: Better Essays

Open Document

Essay Preview

Recent figures show nearly 3 percent of all U.S. home mortgages are now in foreclosure, and experts are saying that number will rise for at least another year. The foreclosures add to the growing pool of unsold homes in a market that has been deteriorating for the past two years. This is driving down prices of all homes, most of those whose owners have never missed a payment. That’s why it is in everyone’s interest to stop this wave of foreclosures and get the unsold inventory off the market as quickly as possible. Unfortunately, the power to solve this crisis is in the hands of very people who caused much of the problem in the first place: bankers and the federal government. Pressured by federal bureaucrats after passage of the community reinvestment act, bankers gave mortgages to people who should never have gotten loans, asking for nothing down and little proof of income. Now, having repossessed the homes, the banks have become sellers, a role for which they are woefully ill-suited. Banks are notorious for letting offers pile up on their desks for months at a time. Would-be buyers – discouraged by the lack of response and ultimately enticed by the plethora of more accessible homes on the market – move on to other properties, most of which are more attractive than empty bank properties because someone is living there and taking care of them. Making matters worse, bankers give Realtors incentives to steer buyers away from the foreclosed properties by offering smaller commissions than the going rate for other homes. Is it any wonder that the inventory of foreclosed homes continues to grow? There is a way out of this mess, but it will require exactly the kind of short-term pain that everyone in government has been striving to a...

... middle of paper ...

...ttled and a buyer’s money is sitting at the title company, the FDIC can take weeks for final signatures. Left in the FDIC’s hands, millions of houses will sit empty and drag down values of surrounding properties for years to come. Congress needs to get these FDIC properties into the hands of whatever banks can show a track record of liquidating foreclosed properties in 60 days or less. This isn’t rocket science. A well-priced home in the hands of a responsive seller will sell fast. Get these foreclosed home into the hands of a few efficient banks and this crisis will soon be over. The real problem lies with the system that created the problem. If the federal government would just get out of the way, the good banks would step up to solve the crisis, the bad banks would disappear and a stronger system would emerge to ensure that this sad history never repeated itself.

Need Writing Help?

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

Check your paper »

How To Solve The Foreclosure Crisis Essay examples

- The foreclosure crisis in America is growing, and becoming less and less exclusive daily. At first, it applied mainly to lower income individuals and families, or those with subprime loans and other credit entanglements. It stands to reason that those looking to use credit to purchase a home must be mindful of their credit standing, and the direct effect it will have on their interest rates. If they acquire mortgages in this state, and cannot maintain the payments, the obvious result is a financial snare....   [tags: Economics, Mortgage, Housing Crisis]

Better Essays
1487 words (4.2 pages)

Essay on Housing Crising in Britain

- The Independent It has been claimed by one of the Britain estate agency Savills that the property market of Britain is facing a housing crisis and there is a severe shortage of new houses . It adds that the situation of houses is really getting alarming . It has quoted the remarks of a British governor that the British housing market is in crisis due to serious structural issues in the in the housing sector. The root cause of this problem is no fresh addition of new houses in the housing sector....   [tags: House Shortage, Structural Issues, England]

Better Essays
1453 words (4.2 pages)

A Solution to the Foreclosure Crisis Essay

- If Americans would like to stop foreclosure on their homes, we need to address the root or the heart of the problem, not just a branch or limb. Solving foreclosure would be like putting a band-aid on a wound which needs surgery. The real problem resides in human behavior and governmental policy concerning the environment which we inhabit. So, with this information, I will address how to come about a real solution in terms of preventing foreclosure (and better than that, solving what causes foreclosure) (which is interrelated with environmental health)....   [tags: Economics, Mortgage, Housing Crisis]

Better Essays
2416 words (6.9 pages)

The Crisis And My Opinion On The Housing Market Development Essay

- In this Essay, I will provide the reader with a concise summary in regards to the role played by the monetary policy in the housing market development. Furthermore, the reader will have the opportunity to fully understand the root curse of the crises and my opinion on the critique of the monetary policy.   What Role Did the Setting of Monetary Policy Play in The Housing Market development. It’s obvious that whenever a disaster struck, there must be a scape-goat. In this scenario, regarding monetary policy, every Tom, Dick and Harry wants to know and as well want to hold someone responsible for whatever that goes wrong....   [tags: Monetary policy, Federal Reserve System]

Better Essays
782 words (2.2 pages)

The Housing Crisis: A Result of Sub-Prime Adjustable Rate Mortgage Loans

- While tax cuts, refinancing and subsidized federal loans can temporarily solve a housing crisis, it can never take out the roots of the weed out of the ground. What was it that threw us into a foreclosure meltdown in the first place. Did people suddenly lose all their money. Perhaps the government failed in some way. No. The fact of the matter is that people began to borrow money through a sub-prime, adjustable rate mortgage loan and then couldn’t repay the lenders. The government is ready and willing to do whatever it takes to fix the housing crisis and their swift efforts so far should be praised....   [tags: real estate]

Better Essays
1180 words (3.4 pages)

Trade-Down Home Exchange Program: My Proposed Solution to Solving the Foreclosure Crisis

- The home foreclosure situation is a daunting problem. As a nation, we need to examine the root of the problem, explore available options, implement new ideas and programs that have the best projected outcome and then review to determine successfulness of the changes. Before becoming an educator, I was a mortgage loan officer. I know, first hand, how stressful purchasing a home can be and the frustrations that hang on financial hardships and refinance loan packages. I welcome this opportunity to voice my concerns and ideas in regards to this foreclosure battle....   [tags: foreclosure, housing, economy]

Better Essays
1326 words (3.8 pages)

The Foreclosure Crisis Essays

- The world currently faces a perfect financial storm of massive proportions. Fiscal mistakes in government and business have worked to form a market situation more volatile than any since the Great Depression. The predicament of home foreclosures caused by this crisis reaches across the United States, and it affects the government, corporations, and individuals alike. These foreclosures displace families from their homes and overload lending institutions with houses that have been devalued by the market....   [tags: Economics]

Better Essays
1482 words (4.2 pages)

The Foreclosure Crisis Essay

- The foreclosure crisis is a problem disguised as many smaller problems: political, social, and economical issues to name a few. Just like there are several conditions that need to be present in order for a hurricane to form, several things need to come into play in order for foreclosures to persist. The economy’s generous desire to supply every family a home through zero down payment mortgages, the aspiration of a social classes’ need for status as being homeowners, and a city’s political structure’s greed for their cities to grow; are all in good intentions....   [tags: Economics]

Better Essays
1377 words (3.9 pages)

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

- 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....   [tags: real estate, foreclosure]

Better Essays
1596 words (4.6 pages)

The Global Financial Crisis Essay

- 1. Introduction 1.1. Background The Financial crisis was triggered in 2006 when US housing market began to crumble as the housing price reached their highest point after years of speculative price increase; many house owners defaulted on their loans, particularly subprime mortgagers (Archarya et al., 2009). Starting in mid-2007, the outburst of US housing bubble in the subprime mortgage leads to the global financial crisis that has been often so called ‘Great Recession’ (Verick and Islam, 2010)....   [tags: subprime mortgages, Great Recession]

Better Essays
3570 words (10.2 pages)