The Foreclosure Crisis

Improved Essays
Foreclosure is a process by which a lender forcibly tries to sell the property of a lendee for non-payment of the loan attached to said property. In 2007 the mortgage market suffered significant foreclosure crisis. Several homeowners were finding themselves unable to make monthly payments to lending agencies, which subsequently led to mass foreclosures. According to Tatom (2009) the mortgage loan foreclosure has been the biggest economic crisis since the Great Depression. The housing market has suffered because of the inability to meet the financial demands of creditors. Tatom (2009) Further reports that subprime loans made up to 53% of the mortgages at the time the market collapsed. These loans are loans provided to borrowers with low credit …show more content…
In an effort to keep home owners in their homes the federal and state government have sponsored several foreclosure-prevention programs. One such program is the creation of the right to rent mandate that allows homeowners to remain in their homes, paying rent at the rate prior to foreclosure. The homeowner would remain in the property until a buyer comes along. According to Foreclosure (2014) this option to rent previously owned homes will increase community stability, morale, and preserve property values. Another option for previous home owners is a rent-to-own option. Homeowners who have been through the foreclosure process must be mindful of this option. As the problem that caused the first foreclosure unless resolved may lead yet to another …show more content…
Since homeowners are feeling the harsh reality of losing their homes because on none payment of their mortgage, some are forced out of their jobs because of downsizing. Losing one’s means of livelihood results also in non- payment of bills including mortgage. With fewer persons buying properties, the construction industry has suffered significant loss of business opportunities and workers. With a decrease in the demand for houses the industry is forced to lay off most of their workforce. Less business opportunities results in less revenue that will be generated into the economy.The effects of foreclosure has also affected the local government spending. With more home owners losing their residences there is a resultant reduction in property taxes. Local government relies heavily on revenue from property taxes. Local government has also incur more debt from trying to preserve abandoned properties from vandalism and

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