Solving the Foreclosure Crisis Essay

1517 Words 7 Pages
The steady increase in foreclosures facing American homes is obviously a stormy struggle for more than the 1.8 million Americans who have defaulted on their home loans this year alone, according to Moody‘s Economy.com. The tsunami of this foreclosure crisis is devastating my family: my dad is unemployed, our rental properties can neither be rented nor sold and are about to be foreclosed upon, our mortgage payment is sky high, and our personal expenses are still rising. We are not alone, in fact, many borrowers are threatened with foreclosure as they are plagued with unemployment, unaffordable mortgage payments, and negative equity; and this delinquency of borrowers is the reason behind the failing banks. It is a domino effect that can only …show more content…
With a strong economy, my parents decided to invest in real estate rental properties. Along with the majority of prospering Americans, my parents’ confidence in the housing market grew and, together with other borrowers, they took on huge loans assured of their employment when paying the loan in the future. As the economy took a nose dive and borrowers started losing their jobs, the ability to service these huge mortgage obligations became difficult. Lenders need to begin practicing subjective discretion when dealing with each delinquent borrower requesting forbearance, the partial payment or no payment for a specific period of time. Inexperienced, first-time homeowners and amateur real estate investors, who were trying to make some easy money by speculation, are suffering greatly as their properties are being foreclosed on throughout the nation. The problem with speculation is the driving greed encouraging amateur real estate investors to compete with seasoned investors, who themselves were only slightly aware of all the gains and losses associated with the real estate business cycle. When dealing with speculators, lenders need to ascertain with each individual whether or not their property could be a long-term investment benefit to the bank through the borrower. Speculators need to be seen as potentially profitable entrepreneurs rather than temporary expensive burdens. Additionally, first-time homeowners originally lacked the savings to purchase a home and, with this

Related Documents