The newspapers and news stations scream with headlines of economic and financial calamity: American jobs are being lost, foreclosures are at an all-time high, banks and other financial institutions are bankrupt. In 2009, 3.4 million American families have lost their homes to foreclosure, according to RealtyTrac. There is talk of us enduring another great depression like the one our great-grandparents suffered through. It is true that Americans have enjoyed many years of economic bliss and our society has fallen victim to mass consumerism and “keeping up the Joneses”. But current lessons being taught by the economy now suggest we move in a different direction. There is still time to turn the tide; however, we as a nation and a people must confront and find new and creative ways to solve issues like the foreclosure crisis.
A lot of our past mistakes were attributable to the expectation that home values were always going to rise, that jobs would always be plentiful and incomes would always increase. Financial institutions approved risky mortgages based on that model. Recent events have thrown doubt on those assumptions. Our sense of complacency in thinking the way it's been is the way it always will be doesn't work anymore. The truth is, we can't take anything for granted anymore. And we have to think differently if we are to survive the current crisis and prepare for the future.
While it is beyond doubt that banks and other lending institutions are partly to blame, most of them have either folded or changed their lending practices to adjust reactively. ARMs and other high interest, shaky loans are passé. And although the banks did write the loans to get people in more house than they could afford, it is the consumer that signed the loans. So the government comes in to bail out big banks in trouble and struggles to help ease the foreclosure crisis through short-term measures like its first-time home buyers tax incentive and foreclosure prevention programs. It’s a case of too little, too late.
If the government is to come up with effective programs it must learn to act more proactively. The government needs to regulate greedy banks more so these lending practices are controlled before they become a problem. Another action that could be taken is a better intervention program where the government could buy out loans that are in trouble and work out a deferred arrangement. The government also needs to examine other methods of subsidized housing to help people in lower socio-economic brackets have the opportunities of the American dream. There also needs to be a government-sponsored protocol for families who are a couple of months behind, but could get back on track with a deferred program or a reverse mortgage. All families with the possibility of a foreclosure looming need to have early interventions through a government agency that represents their interests and not the financial institutions’ interests. But to be very effective, the...