Foreclosure is one over arching problem facing the United States of America today with no one perfect solution. Each person in the US suffering from foreclosure has a unique circumstance and situation that has led them to the economic turmoil they face, and that uniqueness therefore requires any solution to the overall issue of foreclosure to be versatile to a plethora of situations. There is not one faultless way to resolve the crisis, but with a combination of different measures, the foreclosure crisis can be slowed.
The current foreclosure dilemma can roughly be divided between two main groups: homeowners who cannot afford their mortgages due to either a raise in the rate for an adjustable rate mortgage or a decreased home value and homeowners who are unable to pay their mortgages because they suffer unemployment. Foreclosure can be best stopped if these two groups are treated differently. As a generalization, different economic conditions leading to their current position of foreclosure separate these groups. For those who cannot pay the change in their mortgage rate, the burst of the housing created a situation that pushed them towards foreclosure while the economic down turn resulted in the unemployed American’s inability to pay their mortgage. The first group of the current foreclosure dilemma should be dealt with individually while the second facet requires overall economic recovery.
The current economic disaster began, in brief summary, as homeowners started to default on their mortgages and the price of homes decreased. Now, many homeowners with adjustable rate mortgages who had planned on refinancing their house to a fixed rate once the adjustable rate increased are unable to refinance because their house value has decreased to a point where they cannot cover the difference in the mortgage and value; the result is many homeowners are trying to pay mortgages they cannot afford and running the long run risk of being foreclosed on. The main goal of my foreclosure prevention plan is to keep these homeowners in their current homes without foreclosing on them.
To accomplish this task of keeping homeowners’ in houses, the United States’ federal government needs to create a deal with willing and participating banks; banks must allow homeowners to refinance to a low rate fixed mortgage at a low refinancing cost, but would have assurance that the federal government would pay half of the loss if the homeowner either sold or foreclosed on the home before it reached the value of the initial mortgage. Banks would be fairly receptive to this plan since if the homeowner were to foreclose, the bank would only receive the refinanced value, whereas with this program, banks would at least recover half of their loss from the federal government.
The homeowner would also receive benefits if they chose to participate in the government’s program. Not only would the homeowner be able to stay in the house, but if they were to remain in the house...