Foreclosure Crisis Solution Essay

830 words - 3 pages

Foreclosure is a very sensitive topic and one that almost everyone decides to look up to the tax payers to solve. This is not a feasible option, like tax relief or programs of payment assistance as that only adds to the economy spiraling down and not solving issues for the homeowners.

When faced with a person who is going through foreclosure the main concern of the lender is getting their money back. The capital invested in the buyer to purchase the house is ALWAYS secured by the house - but the interest is not. The issue that overwhelms a homeowner is a change in their income due to unforeseen circumstances such as death, illness, change in household (ie divorce) and unforeseen employment changes. That though to a bank is not IMPORTANT and this has homeowners avoiding the bank as the cold shoulder is what they receive. The best policy for a situation like this is communication.
There are two general homebuyers under stress profiles:

The homebuyer that needs time to get back on their feet and the homebuyer that can't afford it now and can't later and would like to downsize but can't because the house wont sell.

The best option so that everyone is happy is to allow only interest to be paid with no capital allocation. What I mean is - the interest the homebuyer is paying in their monthly payment should be the only payment they should be making with no contribution to equity. Though, the interest should be calculated as if equity payment has been made if interest only payments are made for more than 6 mos. The house will not go down in value thus equity is secured for the bank and the homeowner is still living in the house allowing them time to "get back on their feet". This option is kind of like a freeze option. Meaning that when equity starts to be paid in conjunction with interest a few months or a couple of years down the line, the homebuyer will then be paying the interest due "as if payments to equity were made all along" of the now, that is they will be paying the whole monthly payment as if they had been paying in a timely fashion from the initial payment of their home loan until today. The equity that has remained unpaid during the programs effect will be considered a seperate loan account called Homebuyer's Relief Account which will be...

Find Another Essay On Foreclosure Crisis Solution

A Practical Solution to the Foreclosure Crisis

1070 words - 4 pages . Negative equity occurs when a homeowner owes more on their home than it is actually worth. This problem is commonly caused by actions mentioned in the second paragraph, and results in the highest foreclosure rates of any other given reason. In order for the foreclosure crisis to be adequately dealt with, the issue of negative equity must be at the forefront of solution discussions. Now that one has a clearer idea of the factors that contributed to

A Solution to the Foreclosure Crisis

1225 words - 5 pages I can provide a solution to the foreclosure crisis with a two part plan that will provide increased home equity and employment. The plan provides loan modification opportunities, financial rebates and new jobs in infrastructure construction and alternative energy resources. There are many flaws with the United States current plan of action and it all begins with our president’s $650,000 program. President Obama’s Mortgage Relief Program is

Solution to the Foreclosure Crisis: Lending Laws

1606 words - 6 pages purchase a property that is either in the process of foreclosure or one that has already been foreclosed upon. They feel that is where they can find the best deal. That is all well and good. The problem is that the banks, in many instances, cannot seem to make that process run quickly and efficiently. Buyers are frustrated. The real estate market bogs down. One solution to the foreclosure crisis is to get out of it as quickly as possible. It will help

Three Part Solution to Solving the Foreclosure Crisis

1029 words - 4 pages rates began to rise and housing prices started to drop in the United States, refinancing became more difficult. The United States needs to bounce back from this foreclosure crisis and it needs to happen quickly. There are three parts of my solution which consist of a limit on adjustable rate mortgages (ARM). Another is a law that requires banks and lenders to use a more complex background check for potential home buyers. Lastly

A Solution to the Foreclosure Crisis: Stopping Urban Sprawl

1237 words - 5 pages The truth is there is no simple solution to solving the foreclosure crisis, but there is a way to alleviate the crisis by creating the right incentives. Neighborhoods should have the option of using the policy of “Community Buy-Back.” This policy is one that I thought of and it is something that I see as working very well in common practice. People know that foreclosed properties lower surrounding properties values. No community wants their

Foreclosure Crisis Solution: Saving to Buy a House

1169 words - 5 pages and most technologically powerful economy in the world, we are becoming an entitlement society. There is one possible solution to help this crisis all over America. Banks should require people to pay 20% or more down on a house before they can buy it. The prices of the houses would then fall to more affordable levels because they would not be able to find a buyer, almost forcing the seller to lower the price. Another part of the solution would

Solution to the Foreclosure Crisis: Return to the Ancient Practice of Bartering

1226 words - 5 pages solution to the high number of foreclosures we are currently seeing in the marketplace. This solution will help people who are looking to upgrade their homes and also people who are looking to get out of high mortgages they can’t afford to pay any more due to loss of income or loss of employment. By setting up a national program that is closely regulated, the many people in housing crisis will have the option of seeking a home swap before they have to file for foreclosure. This solution may sound like a radical idea, but it may prove to be the one thing that will help turn around the alarming number of people who are feeling underwater.

Trade-Down Home Exchange Program: My Proposed Solution to Solving the Foreclosure Crisis

1369 words - 5 pages The home foreclosure situation is a daunting problem. As a nation, we need to examine the root of the problem, explore available options, implement new ideas and programs that have the best projected outcome and then review to determine successfulness of the changes. Before becoming an educator, I was a mortgage loan officer. I know, first hand, how stressful purchasing a home can be and the frustrations that hang on financial hardships and

Questions About Foreclosure

1144 words - 5 pages What is foreclosure? How does foreclosure happen? What is the legal process of foreclosure? Is it inevitable? These are questions that I am sure everyone is asking themselves with this foreclosure crisis at hand. But there is a bigger question on the horizon; can we stop the foreclosure crisis, and who and what holds the key to this problem? In today’s economy foreclosure seems inevitable. But I heard something yesterday that shocked

Solving the Foreclosure Crisis

1278 words - 5 pages homeowner is facing a different situation from the next, and while the same principle of a solution can be applied to every homeowner facing foreclosure, the solution must be applied differently based on the severity and uniqueness of each case. In order to create a meaningful policy proposal to solve the foreclosure crisis, the problem must be viewed as a socio-technical system (STS). Such a structure separates three aspects of the problem that

Solving the Foreclosure Crisis

1157 words - 5 pages definitely be beneficial in the long run because in order to overcome the crisis currency will be lost. Unity, greed, undercover corruption, and selfishness are the main ingredients that are combined to make this huge chaotic melting pot called economic foreclosure. By facing the facts and working with the essentials in front of you, the government already has their solution, but extra effort, unity, and positivity will make it all happen. In

Similar Essays

Solution To The Foreclosure Crisis Essay

1131 words - 5 pages My family has been severely hit by the foreclosure crisis. My mother lost her home in 2005 and my father is having problems paying his monthly mortgage and almost went into foreclosure last month. The foreclosure crisis is not just something you see on T.V.; it has invaded our private lives. What I find most disturbing is the massive amount of bailout funds that were given to big companies that were about to go bankrupt. Billions of

Solution To The Foreclosure Crisis Essay

1544 words - 6 pages The solution to the foreclosure crisis requires cooperation among the borrower, the mortgage lender, and the federal government. Current proposals by President Obama’s administration call for federal government intervention through interest rate subsidies for refinancing stressed mortgages, guarantees of mortgage-backed securities buyouts, and funding to fill gaps in reduced monthly payments as an incentive for lenders to work with borrowers in

A Solution To The Foreclosure Crisis

1035 words - 4 pages The foreclosure crisis has reached new heights since the all-time high deficit in the economy. U.S. foreclosure rates went up more than 81% and 861,664 families lost their homes to foreclosure in 2008 (Les Christie). Also, 54 households received a foreclosure notice last year (Les Christie). So what is the solution? Bold action is needed to address this serious issue. I suggest a “real estate pause” for a temporary amount of time

Proposed Solution To The Foreclosure Crisis

1310 words - 5 pages afforded us is a wiser use of those resources. As it was no single instance or policy that created the crisis, there will have to be a more comprehensive solution. 1. Separate the disciplines. Create a division of pre-purchase home ownership counselors and foreclosure mitigation specialists. Provide the funds needed to not only train them, but require certification and licensing. Just as realtors, builders and appraisers are required to be