Before 1950, it was rare to have a mortgage. But if someone did have a mortgage at that time, it was not a thirty year mortgage like they are in present day. Never were they for the entire value of the home. (Most are now with a 0-5% down) People would buy a house for $15,000 and pay $10,000 and the remaining $5,000 would be mortgaged and paid off over a short time. The people who bought the home actually owned it instead of the bank. People used to save to buy a house, nowadays people are programmed to spend their money as fast as they get it. No average citizen has “real” money; it is all borrowed from the banks. That makes every person enslaved to the banks, therefore starting the cycle of future foreclosures.
Banks give out mortgages to people when they do not even know if they can actually afford to pay off what they are helping them buy with the money. People can not even save $3,000-$5,000 over a period of years. So how could a bank justify them paying back $75,000-$100,000+ for a house, while also taking new bills; property and school taxes as well as homeowners insurance. Not to mention the maintenance of the home. Over a period of thirty years, a homeowner will pay close to three times the amount of the houses initial value making it nearly impossible to pay such a debt off. Although this country has the largest 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 be to stop building houses that people can not afford. The only reason why the houses are being built is to keep people working and construction companies in business. Also, if the banks make people put 20% down; it will make people actually save money. Make the banks look into what the person is buying and see if they will be eligible to make the payments, as well as lowering the interest rates so the consumer is not overwhelmed and can pay a reasonable balance over time.
The Federal Reserve controls the printing of currency (when asked) and the destruction of currency (when needed) of all paper money so that the value is controlled. The banks only have 3% of actual money in reserves, so they can lend someone $1,000,000 with only $30,000 in “real” money. So if someone is paying $10,000 a month on a $1,000,000 thirty year mortgage, within 3 months; the bank gets its “real” money back. The next 29 yrs and 9 months is paid back with interest to an electronic amount.
In the 1960s, credit companies became established. This then became a new era that blistered over the country putting everyone into an endless trap of debt, continuing the cycle of foreclosures and other future financial...