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 properties.
A homeowner's property will be foreclosed if the homeowner defaults on the monthly mortgage payment. Today, the foreclosure problem is now a epidemic in the American housing economy. Like the rest of the world, the American economy is in recession too, which has made matters worse for people. The Obama administration has offered a rescue plan for this epidemic through its loan modifications foreclosure-prevention programme. This rescue plan provides more financial backing for the banks and financial institutions that provides mortgages to homeowners with tax payers dollars rather than the homeowners who are desperate for financial support. For borrowers to take advantage of this plan, they have to go from a trial phase to a permanent phase of mortgage fixes, but so far the number of borrowers taking part in this program that have graduated from the trial to the permanent phase is below 5% of the total participants. This is not encouraging at all, and the Treasury Department has tried to improve the situation by putting more pressure on lenders like Bank of America and Citigroup Inc., but as the documentation and processing redtape problem that is involved in this program persists, people are beginning to question the effectiveness of this program. Since it lacks effectiveness, homeowners will be right to assume that it's just one of those government ploys that uses adversity that faces many Americans to boost the political agenda of its administration. Looking at the obstacles that faces the effectiveness of this government proffered solution to the foreclosure crisis, people just have to move to better options which they can be more assured of a more realistic solution to their impending foreclosure problems.
If people can't trust the government's proffered solution to the foreclosure problem, then they can look at alternative solutions like using the structural adjustment mortgage or SAM option. SAM was actually introduced about forty years ago, but has been left redundant due to an old IRS-imposed block, which exists in this arrangement because the IRS hasn't clearly ruled whether this arrangement is really a mortgage because it contains terms associated with equity and debt. Fortunately, this block can be removed just by the Treasury secretary's signature. With SAM, homeowners are given a relief opportunity to write down part of their mortgage debt, and in return, they're required to share future appreciation gains on their mortgages with their helpers in this bailout process. For this...

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