Foreclosure Solution Essay

1079 words - 4 pages

FORECLOSURE SOLUTION

The US Census Bureau reports that there is an estimated 51 million housing units in America, with a mortgage balance. According to the Mortgage Bankers Association 10% of all mortgages are behind in payments and an additional 5% are in foreclosure. These figures translate to having over 5 million US mortgages behind on the monthly payment obligations and approximately 2.5 million additional properties are already in foreclosure.
In a recent report from American Title Company, there is an estimated 10.7 million homes with mortgage balances which are greater than the property value. In some areas of the country, the homeowners’ are as much as 65% upside down.
The Mortgage Bankers Association reports that there will be a significant increase in prime-fixed rate mortgage defaults, as the economy struggles with increased number of job losses expected. This does not even address the looming commercial property loans that are delinquent.
Although the mortgage crisis seems to have started with the “sub-prime” loans and the loose lending practices, it has had a much deeper impact on the over-all US and world economy. As people lose their jobs or experience a slowdown in business and decrease in their household incomes, it is harder to meet their financial obligations.
In addition to the tighter lending restrictions and home values dropping, many homeowners that owe more than their homes are worth, have decided to stop paying the mortgage and walk away because they are unable to sell them. In spite of encouragement from the government to work with homeowner and help restructure their mortgages, this is not being done.
In October, 2008, President Obama signed the TARP act. This law was designed to give $700 Billion dollars in funds to banks. This taxpayer money was suppose to be use to keep banks lending and keep the economy working, which was not effective.
I am familiar with this topic because I have watched my parents struggling in the down turn of the economy. My mom and step-dad own a sales business and have several investment homes in California, one of the areas affected the worst.
My parents bought a home in 2005 in La Jolla, so my brother and I could have more opportunities for a better education. When their business went bad in 2008, they had to sell the home, because it became too expensive for them. They had it sold in February 2008, for $2.2 million, but because of the stricter lending guidelines, the buyer’s loan was not funded by the lender. The bank refused to work with my parents on restructuring the loan, which forced my parents to have to give the house back to the bank.
The home was taken back by the bank in November, 2008. That home finally sold to an investor in August 2009 for $925,000.00, nearly $500,000.00 less than what my parents owed and less than 50% of what it was worth 18 month earlier.
Another property that they own, we used as second home and seasonal rental, has a similar story. The...

Find Another Essay On Foreclosure Solution

Proposed Solution to the Foreclosure Crisis

1310 words - 5 pages need to eventually be incorporated as a comprehensive solution. It was no accident that my community service efforts began while studying the present condition of my city and previous efforts to combat the blight created by both abandonment and foreclosure. With thousands of sold to state tax deeds and little State legislation in place giving cities command over properties within their jurisdiction, millions of taxpayer dollars are wasted in an

Unique Solution To The Foreclosure Problem

995 words - 4 pages The foreclosure crisis has been devastating. Families no longer able to afford mortgage payments are forced into bankruptcy, while banks find themselves with properties valued at less than the loan principal. Solutions proposed thus far have primarily focused on loan re-modification measures that only slightly relieve the financial burden for homeowners and frustrate lenders who are forced into less attractive loan terms. However, one 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

Proposed Solution for Solving the Foreclosure Problem

1463 words - 6 pages My proposed solution for the foreclosure problem has several parts. They include eliminating and legally banning interest only loans, mandatory loan modifications, government tax incentives to stay in a potentially foreclosed home and consumer education. Many years ago the mortgage companies created the thirty year home loan. It seems like this extended payment plan would benefit the homeowner by allowing more time to pay for the

Solution to the Foreclosure Crisis: Lending Laws

1606 words - 6 pages solution, I have come up with three steps that could be taken to repair our nation’s foreclosure problem. We first need to reduce the risk of the loan to the lender, and then we need to increase the consumer’s buying power, and also work to make the foreclosure process more efficient. To come to any resolution at all we first need to discover how we got to where we currently are. Real estate values and how they are set must be well understood. The

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

The Online Home-Sharing Solution to American Foreclosure

1026 words - 4 pages The American foreclosure crisis is becoming more serious by the day. According to News America Media, “In November, there was a 56 percent increase in foreclosure notices sent out to homeowners compared to last year” (Fuentes).Families are being forced out of their homes, which strains marriages and begins to dissolve the American family structure. While the situation appears dire, hope is not completely lost. It is vital that we do not wallow

Foreclosure Crisis Solution: Saving to Buy a House

1169 words - 5 pages desperate times, foreclosure problems are a definite issue in American society. To ask to come up with such a solution to an inevitable problem is asinine. The only way to stop any problem is to “deflate the bubble that we keep on inflating” - to stop building houses that are not affordable to the average citizen. But to every solution, there are always consequences. If the banks required people to pay a 20% or more down for a house, realtors would loose

My Proposed Solution to the Foreclosure Problem in America

1429 words - 6 pages my first new home. My loan was approved and the home buying experience was simple. Below, I am proposing a solution that involves accountability and responsibility from all three stakeholders involved in the mortgage process. Proposed solution: Consumer perspective a) Whether it’s the purchase of a first home or the 20th home, each loan applicant should be required to explain their home loan either verbally or in written form to a

Similar Essays

Foreclosure Solution Scholarship Essay

1107 words - 4 pages date was scheduled by the bank for their home in a full foreclosure. The solution would have been a simple one, but one the bank was not willing to entertain. It seems the largest hurdle homeowner’s are struggling with is the past due deficiency that begins the foreclosure process. Lenders have a requirement that this past due balance on a mortgage is to be made whole in one payment, before they will accept any regular mortgage payments, which

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