Foreclosure occurs when individuals are no longer capable of paying their home/business monthly payments, therefore, allowing the bank to interfere and take the property from them. When the bank takes the property a couple of things happen: 1. The bank has to a pay third party fees to try to get its money back. 2. When the bank tries to resell the property for collection of the loan balance, the current economy will determine to what percentage they will gain or incur financial loss. For example, if the reaming loan amount is, let’s say, 600,000 dollars and the current market value is 400,000, that means that the bank would incur a major loss when trying to sell the property. 3. When many of these occurrences occur it brings the reputation of the bank in an awkward stance and disrupts the stock market. 4. Unemployment occurs. 5. Banks might go out of business. 6. Interest variability.
A philosopher once said, “Getting rich quick gets you nowhere” a quote which the banks failed to understand. They thought that with the prices of homes being so high they could generate more revenue by providing more loans. The banks had a good idea but they failed during the implementation because they did not properly analyze a person’s inco...
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...pay tax reasonably. Why should one make billions and the other only a little pay around the same rate of tax, it is nonsense. Everything needs to be at equilibrium for everything to be set right.
In conclusion, since the banks are the main source of money distribution that regulates the national economy its infrastructure must be stable in order to have a good and efficient economy. When looking at the current economy all I can say is that in order to stop this foreclosure problem the cost of homes/businesses must be kept low thus making it affordable for the individuals to pay the monthly mortgage, the interest rate must be low, the cost of daily activities must be low, and those who are in the low income class should get a better salary so that they have an opportunity to invest, so when people have money they will spend money and that’s the key solution.
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