The foreclosure crisis in 2008 destroyed much of America’s wealth. However, with a carefully guided plan, the United States can work its toward recovery. I believe that the responsibility for the prevention of foreclosures starts with the homebuyer and goes all the way up to the government. All parties associated in the process of buying homes share some degree of responsibility for what has happened. This problem gives us the opportunity to fix a system that is in desperate need of overhaul in order to help people from all economic backgrounds.
First, sub-prime mortgage lending practices must cease. This program has allowed people to purchase homes they simply cannot afford. Buyers must evidence a steady flow of income, show a high credit score, and the ability to pay off debt. Loaning substantial amounts of money to people who have no way of evidencing that they are capable of paying off loans is a reckless practice. However, if renters can show that they have paid their rent on time every month in addition to showing the ability to hold a job for a long period of time, the number of foreclosures will decline.
I believe an increase in the value of the United States Dollar is critical to the housing market. When the value of the Dollar decreases in value, people are forced to pay more money in order to acquire goods and services. Consequently, the price of homes increases, limiting the base of prospective homebuyers. A currency with more value is sure to stabilize the value of property, such that more people will be able to become homeowners. There are also many unfortunate byproducts to inflation, such as having more difficulty paying off other loans, which in turn will lower one’s credit score and decrease the chances of buying a house.
Unethical business practices on the part of large corporations have also led to the demise of the housing market. Adjustable rate mortgages are designed with the sole interest of the lender in mind. With the economy currently in a recession, many people are unable to handle increased payments to mortgage companies. The United States Government must regulate how much companies can increase a homeowner’s rate in order to prevent more people from defaulting on payments because people’s rates increase so much that they are not able to handle this burden. Perhaps the Government should consider banning this practice altogether. With America’s unemployment rate into the double digits, few are able to incur an increase in expenses. I believe there is a direct correlation between one’s interest rate increasing and people defaulting on their loans.
One of the more prominent situations that homebuyers face is the problem of paying off a loan on a house that is more than what the house is worth. Because home prices have been decreasing, real estate is no longer the safe bet it once was. Because the value of the United States Dollar has been decreasing, the value of homes should be...