Proposed Plan To Ease The Financial Crisis And Foreclosure Problem In America

1715 words - 7 pages

The United States of America currently faces a massive financial crisis that has led to numerous foreclosures and a loss of confidence in financial institutions. The United
States government must take decisive action to give those with impending foreclosures the ability to keep their homes. Furthermore, these government actions should focus upon ensuring that people are able to pay on own mortgages, rather than relying upon bailouts from the government. However, the government’s primary goal for all actions taken ought to be long-term stability and preservation of consumer confidence in financial institutions so that another financial crisis may be averted.

In order to solve the problems that America faces, a brief overview of their origin is necessary. Misplaced confidence in the continuous bright future of home prices and the attempts of lenders to profit in every way possible were major causes of the current crisis. Lenders often made mortgage contracts with little consideration for the ability of the recipient to repay. They were able to do this with little risk for themselves because these loans were bundled and sold off to investors. Furthermore, the demand for loans with more flexible standards was tolerated by the lenders because the lenders believed, just as those demanding the loans did, that the increase in home prices had no foreseeable end (Shiller 50). Many people saw an opportunity to make money off of subprime and adjustable-rate mortgages, and the fantasy of endless price increases overcame reasonable judgment.

A national goal of increased home ownership augmented these causes, encouraging financial institutions to make irrational loans and encouraging people to purchase homes they could not afford. Because of this national priority and the fact that government officials at the Federal Reserve also believed the bubble of housing prices would not burst, these officials lowered the federal funds rate, increasing the housing boom and therefore, the magnitude of the crisis when it ended (Shiller 49). These policies and ill-conceived notions created a speculative bubble that would inevitably break because of simple supply and demand. Artificially high prices led to an increased supply, which then caused a massive price downturn in mid-2006. Houses became difficult to sell, and many homeowners who had taken adjustable-rate mortgages with hope of a quick turnover found themselves stuck with unaffordable payments. Many others had little understanding of their situation, and had been sold houses far more costly than they could reasonably pay for after the rates on their mortgages increased. Foreclosure became the easiest way out for many of these homeowners, leading to the foreclosure crisis America now faces.

The next step in finding a solution is defining what an effective solution ought to accomplish. The primary objective is a stable housing market, with drastically reduced foreclosures. The current crisis...

Find Another Essay On Proposed Plan to Ease the Financial Crisis and Foreclosure Problem in America

Proposed SCUBA (Stable, Conservative Underwater Borrower Assistance) Program to Ease the Foreclosure Crisis

1502 words - 6 pages There is no shortage of programs now available in the mortgage industry to help ease the foreclosure crisis. Although some of them provide direct financial assistance to key participants in the foreclosure process to encourage them to find a less costly alternative, there is really no national effort to address one of the most stubborn factors that often leads to foreclosure and in some cases thwarts efforts to avoid it. Many borrowers in the

Proposed Plan for Solving the Foreclosure Crisis

1376 words - 6 pages of the foreclosure crisis and speed up the timeline in this regard to help jump start the economic recovery that began about six months ago. Before detailing my plan, a discussion of the parameters of the foreclosure process and an objective analysis of the realistic financial criteria for each potential foreclosure should be identified. Although many of the procedures to attempt to resolve the foreclosure crisis may be implemented for all

Proposed Remedy for the Foreclosure Problem in America

1265 words - 5 pages The foreclosure problem today in America is one of the worst economic crisis that has demonised the American economy in recent years. Like any other problem that has a solution, this problem can also be remedied too. To remedy homeowners from foreclosure risks, homeowners can approach this problem by using the structural adjustment mortgage or SAM option, using the home short sale option, or they can just accept the foreclosure of their

Foreclosure Crisis - Proposed Plan to Stabilize and Elevate the Housing Economy

1110 words - 4 pages terrifying. With banks going bankrupt and fewer Americans being able to pay their mortgages, the question must be posed: how will we ever survive this foreclosure crisis in America? An economic plan that will first stabilize, then elevate, the housing economy is necessary at this time. Stabilization is key. Without a decent foundation, any fine plan is destined to fail. To stabilize the housing market, the United States first must

Proposed Plan to Aid the Foreclosure Crisis and Improve the American Economy

2238 words - 9 pages Hard times lie ahead of us, and yet our best days are still to come. The purpose of the present paper is to elucidate the nature of the present foreclosure crisis, to examine its causes and to discuss possible recommendations for resolving an ever-growing rash of foreclosures, and to nurture a real, lasting recovery. Thousands of personal and family foreclosures are occurring every month as millions of people reorganize their lives

Proposed Plan for Resolving the Housing Crisis in America

2197 words - 9 pages pillar of financial success is the establishment of a savings plan and savings account. There is no better buoy against the tempest of a financial crisis than to have a fair amount of reserve cash to rely upon. The savings plan extends to each area of life and is applicable not only to housing, but it is especially important in this arena. For example, Adult A has a savings account of $20,000 and Adult B has a savings account of $2,000. Both

Proposed Solution to the Foreclosure Crisis

1310 words - 5 pages most important first step in solving the problem at hand. It is with personal experience that I speak to the issues regarding critical stabilization for neighborhoods now devastated with the current foreclosure crisis. It is accurate to condemn foreclosure as a crisis. Homeownership creates the economic benefits of jobs, fees, sales, increased tax revenues and the negative effects of foreclosure are devastating not only to the economy, but to the

Proposed Resolution to the High Foreclosure Problem

1989 words - 8 pages granted repayment plans (FDIC/Foreclosure Statistics 2). I would suggest that lenders who receive what they consider to be a valid indication of financial crisis work with the individual to modify his loan. The lender would need to set up procedures to freeze the borrowers current loan repayment plan and allow a reasonable timeframe to implement a loan modification. Modifying the terms of the note would require the lender to verify the

Proposed Solutions to the Foreclosure Crisis

1047 words - 4 pages Foreclosure is a growing national disaster in the United States. Every time you tune in to your local news, there is a new family whose house is being foreclosed. Every time you ride around the neighborhood, there is another house up for sale. There are several solutions to this increasing trend including cutting government spending and cutting funds towards unsuccessful government programs, devising financial plans to assist families by setting

Solving the Foreclosure Crisis- Proposed Plan for New Laws and Reform of Schools, Prisons, State and Federal Agencies to Improve the Foreclosure Crisi

1034 words - 4 pages The Home Foreclosure Crisis is due to people losing their jobs. Without jobs, people do not have a steady income to pay their mortgage and keep their homes. To solve the crisis, job creation is required. To create more jobs, the government needs to operate schools, prisons, and state and federal agencies more efficiently. So much money are wasted, when they could be use to give people jobs. And new laws are needed regulate the banking systems to

Exploring the Foreclosure Crisis and Options for Amending the Problem in America

1085 words - 4 pages According to an interview that I took with a real estate agent, the foreclosure is partially due to appraisers and sellers placing a higher value on the house than what it is really worth. So if there was an actual loss of $5,000, then the people who buy the house would have a greater loss than that. He also said that loan officers are also to blame for giving loans to people who were not capable of keeping up with the payments. This issue can

Similar Essays

My Proposed Plan To Alleviate The Foreclosure Problem In America

1139 words - 5 pages Every three months 250,000 families enter into foreclosure. “One child in every classroom in America is at risk of losing his/her home because their parents are unable to pay their mortgage.” (Market Wire)These facts are not only shocking and true but are continuing to grow. It might be time for the government to step in and help the homeowners of America. In an effort to solve the foreclosure dilemma we need to look at the problem then try to

Proposed Solutions To The Foreclosure Crisis In America

1815 words - 7 pages Foreclosure, the process of claiming the defaulted property to cover the cost of an unpaid debt, has hit America like a tidal wave. Considered to be a crisis and a major factor in the poor economic situation of today, there is no doubt that the current state of the housing market and the influx in foreclosures across the nation has had a dire impact on the American economy since the beginning of 2007. Strategies, policies, action plans, and

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

Proposed Plan To Reverse The Current Foreclosure Crisis

1699 words - 7 pages face foreclosure. The vision for correcting our future as a nation lies within the many facets of the 20/30 plan. The 20/30 plan seeks to address our country’s deepest economic issues while still being considerate of our social communities, our federal government, and even the many lending institutions that initially caused this crisis: • Helping people stay in their homes maintains communal relationships. • There is minimal government