The foreclosure crisis is a complex problem, with no simple solution. Several factors need to be addressed in order to turn the foreclosure crisis around. The solution to solving and preventing further crises is a multistep approach that will take time. By setting up some safe guards we can help stabilize the economy and prevent future economic and housing market downfall re-occurrences.
First, there needs to be more emphasis on creating jobs and bringing jobs back to the US from abroad. There need to be tax breaks for companies that stay in the US and more taxes placed on companies that choose to go abroad. Companies residing on US soil will need to pay a fair and competitive wage. Responsible people with a steady income and fair wage can afford to pay their mortgage.
Second, there needs to be a tax or an extra charge on imported items. This would help encourage Americans to buy American made. There should be a more rigorous screening process on foreign imports to ensure safety and quality items are being imported, which would also help create jobs. There also needs to be more public education addressing buying American made products- creating jobs and protecting the economy. There are so few products produced in the US that this is part of the reason we’ve seen a collapse in our economy.
Third, banks and lenders need to quit approving people for loans that are living beyond their means. Not everyone is entitled to own a home; they should first demonstrate proof of financial responsibility. A federal governing body should keep tabs on banks and lenders. Lenders found to be approving loans for people who are not qualified should be heavily fined. A person’s housing cost should not exceed more than 28 % of his/her income and overall debt should not exceed 36% of his/her income. People need to become more aware and more conscientious of their debt to income ratio and the impact on their overall spending budget.
There should be a permanent fixed low home loan interest rate. No more adjustable home loan rates. Anyone wishing to purchase a home should be required to make a substantial down payment of 10% or more. This way, they have something invested in the property and a lender would know they are serious about their investment and desire to own and maintain a home. It should also be required that home owners take a financing class when taking out a home loan. The class would explain about interest rates, break down the costs of ownership and where to seek help if the owner is getting behind on payments. The class would also discuss and disperse information on legitimate groups that handle homeowner counseling to avoid foreclosure.
There should be stricter guidelines for obtaining a second mortgage. There should be one low set rate, no more 5 year fixed arm loans. The rate would be subject to change every 10 years, but would only affect people who are buying at that time and taking out a new loan. Loans previously in place would stay at...