Solutions to the Foreclosure Crisis: Refinancing Essays

Solutions to the Foreclosure Crisis: Refinancing Essays

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Because homeownership is central to a family’s security, well-being, and long-term asset accumulation, the foreclosure crisis must be attacked aggressively by Federal and state governments. Critics of stimulus spending argue that the worst of this crisis is over, but many trustworthy indicators suggest that foreclosure rates will not return to pre-crisis levels for several years. In order to slow foreclosure rates and begin to repair affected communities, steps must be taken both to prevent existing homeowners from facing foreclosure and to prevent lenders from issuing mortgages that are beyond the ability of the borrower to repay. Although the latter step of increasing regulations regarding predatory lending in the future is beyond the scope of this proposal, it is absolutely essential. Without changes in mortgage lending, any positive steps taken to protect current homeowners will be negated.
Two primary methods must be used to help borrowers who are currently in danger of losing their homes. First, refinancing opportunities must be increased, particularly for families who were coerced into borrowing at sub-prime rates. This is a policy area that has already been addressed, but more must be done. Many of the programs previously implemented by state legislatures have used rigid standards of refinancing without regard to the individual’s specific needs. In some cases, this has caused homeowners to spend more money than they would have lost in a foreclosure! As of November 2009, Maine is the only state requiring loan servicers to produce individual calculations. Their groundbreaking legislation must be implemented nationally in order to benefit homeowners elsewhere. Second, borrowers who have lost their jobs and cannot benefit ...

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...t often lack decent grocery stores, and raising revenue by selling the produce. Program participants could also create new programs based on the needs of their own neighborhoods.
The program would require the hiring two sorts of liaisons: lawyers or other professionals to make the agreements with banks, and social workers or managers to determine eligibility, enforce community service requirements, and create new programs. These jobs would be created in areas with high unemployment and are therefore another positive benefit of the proposed legislation.
Solving the foreclosure crisis will not be easy. The economic crisis has affected every American, and our government has already stretched itself thin trying to prevent further catastrophe. We must dig deeper however, at least for a short while, in order to save entire cities and regions from complete destruction.

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