Essay on Suggestions for Improving the Foreclosure Crisis

Essay on Suggestions for Improving the Foreclosure Crisis

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Approximately 23% of all property owners nationwide owe more on their mortgage than the value of their property (Newsweek 12/09).
The percentage of homeowners ???underwater??? is much higher in the states where market values were skyrocketing 20% to 35% annually between 2001 and 2005. Almost everyone who had purchased a home during this period owes more than the property???s value today. States such as California, Florida, and Nevada set the standard for totally unrealistic escalation of sales prices.
Buyers became caught up in the real estate buying hysteria; buy now and buy the most expensive home or invest in multiple properties. Lenders were more than eager to lend money during the rush and the demand to buy, and that all but eliminated traditional guidelines for buyer loan qualification requirements.
Stated income without income verification was one of many ???qualifying??? methods used by lenders as loan approval criteria. Many lenders would fashion the loan to accommodate almost any buyer who walked through their door. After all, where was the risk? There seemed to be no end in sight. If the buyer did not jump on the house buying band wagon they would seemingly be priced out of the great American dream of home ownership forever. In the hot spot regions, market values more than doubled in just a two or three year period. My father who has been a Realtor in Palm Beach County for many years tells me that it was not uncommon for a $200,000 home to increase in value up to 3% each and every month for approximately a two year period. It is no wonder the public was caught up in this soon to unravel fiasco of a real estate market.

The decline of the real estate market began in 2006. It has been devastating to the ...


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... carrying costs, repairs and selling expenses which will only serve to increase the lenders loss.
6. The seller hardship requirement will be removed as a lender
requirement for lender approval of the short sale and the sellers will not be responsible for repayment of the remaining debt on the property.
7. If the owner wants to qualify to purchase a home again he will
be permitted to do so after a one year probationary period. He will need acceptable credit and he will have to financially qualify under the same guidelines mentioned earlier if the owner were to purchase the property directly from the lender.

This is my plan to streamline the foreclosure process. As the economy slowly recovers, these procedures will serve to assist the recovery of the housing market by improving the long outdated and ineffective methods of liquidating distressed properties.

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