Solving the Foreclosure Crisis

Foreclosure is the process in which an estate which was brought through a mortgage is taken over by the lending company. It results in denying the homeowner the right of the estate, for example, the homeowner is not allowed to redeem the estate. Currently, there is a dramatic increase in cases of foreclosures with more than 4% of 120,000 homes in America experiencing foreclosure. Although some of the homeowners are able to tackle the problem, a majority are faced with the problem because they delay or are seriously behind in paying their mortgage. The process of foreclosure starts immediately once the homeowner misses the mortgage payment at the expected time. Failure to pay at the stipulated time may be due to joblessness, divorce, medical problems, conditions of the loans, and death (Laing, 2009).

Foreclosure is the current threat to the United States financial market and the economy. The advertisement of foreclosed homes which are being sold is causing a decrease in home prices and lowering the values of homes which are in the neighborhoods. Because of this, consumer expenditure has suffered seriously and the situation has worsened financial crisis with the Americans watching the value of their valuable properties, their homes lose worth. The same experience has been observed in $1.5 trillion of securities supported by subprime and the same mortgages have constantly reduced in value resulting in the loss of capital for most banks at a faster rate than the rate at which the government is replenishing them as provided by the Troubled Asset Relief Program (TARP) (Laing, 2009).

In an effort to find a solution for the crisis, treasury department proposed to urge the banks to provide low mortgages of about 4.5%. The step was view...

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... would afford a win-win situation for the government and the homeowner.

Works Cited

Armour, S. (2009). Foreclosure crisis spreads from subprime to prime mortgages. Retrieved on

December 17, 2009 from:

http://www.usatoday.com/money/economy/housing/2009-06-08-home-loan-foreclosures-

subprime_N.htm.

E1Boghdady, D., & Cohen, S. (2009). The growing foreclosure crisis. Retrieved December 17, 2009

from: http://www.washingtonpost.com/wpdyn/content/article/2009/01/16/AR2009011604724.

Grow, B., Epstein, K., & Berner, R. (2009). How banks are worsening the foreclosure crisis. Retrieved

On December 17, 2009 from:

http://www.businessweek.com/magazine/content/09_08/b420034085635.htm.

Laing, R. (2009). How to solve the foreclosure crisis. Retrieved December 17, 2009 from:

http://online.barrons.com/article/SB122853114366984933.htm#articleTabs_Panel_article%3D3