Solving the Foreclosure Crisis Policy Proposals for Bouncing Back from the Burst of the U.S. Real Estate Bubble

Solving the Foreclosure Crisis Policy Proposals for Bouncing Back from the Burst of the U.S. Real Estate Bubble

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Perhaps the greatest threat to the ailing United States economy is the nation’s burgeoning foreclosure crisis. Foreclosure filings for the third quarter of 2009 are up a staggering 23% from just a year ago , with virtually no end in sight. According to Bloomberg, the largest increases in mortgage defaults are appearing in areas that hadn’t previously been a “focal point” of the crisis. As a result of continually high unemployment across the board, as well as a new array of mortgage resets, the crisis which once centered on a few hubs is now spreading across the country in a seemingly indiscriminate fashion. This challenging period in real estate must be met in a highly effective manner, lest the situation continue to deteriorate. The aim of this paper is to examine the foreclosure crisis and identify its true cause so that suggestions may be made for how the federal government, lending institutions, and borrowers can work together to effectively respond to it.
Put simply, foreclosure is a legal proceeding by which the holder of a mortgage can take ownership of and sell a property as specified in the mortgage agreement. With regard to residential mortgage loans specifically, the creditor or bank sells the property after the owner has violated the terms of the agreement – usually meaning they have defaulted on loan payments. Once a rarely discussed topic, foreclosures in the U.S. have reached a point of disaster. The Center for Responsible Lending approximates that there are 6,000 new foreclosures each day – or one every 13 seconds; adding up to over 1,000,000 and counting for 2009. With one in every 136 U.S. housing units receiving foreclosure filings , solving this crisis has potentially become the most important co...


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... to Save an 'Underwater' Mortgage. Retrieved December 2009, from The Wall Street Journal: http://online.wsj.com/article/SB10001424052970204908604574330883957532854.html

Levy, D. (2009, October 28). Las Vegas Leads U.S. With Highest Foreclosure Rate (Update 1). Retrieved December 2009, from Bloomberg: http://www.bloomberg.com/apps/news?pid=20601103&sid=a28Maw5jCzIc

Liebowitz, S. (2009, July 3). New Evidence on the Foreclosure Crisis. Retrieved December 2009, from The Wall Street Journal: http://online.wsj.com/article/SB124657539489043.html

RealtyTrac. (2009, October 15). Foreclosure Activity Hits Record High in Third Quarter. Retrieved December 2009, from RealtyTrac: http://www.realtytrac.com/foreclosure/foreclosure-rates.html

Wikipedia. (2009, December 18). Foreclosure. Retrieved December 2009, from Wikipedia: http://en.wikipedia.org/wiki/Foreclosure


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