The American Dream is always becoming bigger and bigger. Since the end of World War II the United States has been obsessed with suburbia and America’s people have been building and borrowing ever more. The early years of this decade may have paved the way for every family to get a piece of the American Dream, but as we can all see, in the past couple of years, the financing options that enabled just about everyone to own a home were not options that were good for those consumers or the United States’ economy. Federal Regulation and more education are the only way to be politically correct while preventing people from buying more home than they can afford and educate them so they may make the smart choice in purchasing a home.
The housing bubble was believed to just continue growing and growing. States like California, Nevada, and Arizona experienced new home construction growth of historical proportions and funding this growth were adjustable rate mortgages. These loans were available to consumers who had not developed a good credit history, or believed they would move out of the house before the five or seven year mark. Every intention of lenders in providing these loans were perfectly sound. It allowed consumers to own a home, develop or repair credit history, all the while making a home affordable. As banks sold more and more of these loans, everyone in the economy felt the benefit. Developers were seeing business boom and local governments profited from the new property tax opportunities. As property taxes rolled in, government spending increased, new schools were built, and everyone saw the money moving.
Unfortunately, this money was sourced from sub-prime mortgages that many of the people who purchased them, could not afford them. People purchased homes that they could not afford, had they used a fixed rate loan. People failed to realize they needed to leave those homes or refinance to a mortgage that they could afford. The Federal government realized the ensuing housing crisis, and bail out money was made available to mortgage companies and families that were facing foreclosure. However, the government’s action were not 100 percent effective. Many families still faced foreclosure as their mortgage rates were adjusting, and their mortgage payment became too high compared to their income. As people began to face the harsh, and scary reality of adjustable rate mortgages, it became clear government action was necessary to prevent anything like this housing crisis from occurring again.
Even though the US society is much against heavy government regulation in the economy, it seems necessary. Mortgage practices that allowed these adjustable rate mortgages to be sold to unsuspecting consumers were unacceptable and laws or policy from the Federal government need to be put in place that prevents a lender from selling a loan to an ill-advised consumer. To begin with, the basic requirements to purchasing a home need to be more strict....