Solving The Foreclosure Crisis Essay

1366 Words 6 Pages
The foreclosure crisis has had a disastrous impact on the economy and is currently the only sector that has not seen improvement since it was announced that an economic recovery was transpiring. Lax regulation, predatory lenders, an uneducated public and an unaware government have paved the pathway to foreclosure. The American dream includes the notion of homeownership. In pursuit of this dream, questionable business practices and a purchase hungry public caused a financial crisis the solution to the foreclosure crisis is as complex and complicated as the problem itself. . The solutions to the foreclosure crisis means creating a standard for homeownership, structuring adjustable rate mortgages, utilizing current foreclosed properties and …show more content…
Income above all else is the key to homeownership. Income determines how much house one can afford, if at all, if an individual is able to upkeep the home, and if and individual can handle a change in the interest’s rate of a home. Having a set standard alleviates consumer confusions and speculations and allows room for educational programs to have clear, correct, and consistent information for the public. This way mortgage companies will all have consistent ways of determining qualified candidates allowing for differential competition and a better rate for the consumer. Speaking of rates, the crisis has also been due to Adjustable Rate Mortgages (ARM). The step into solving the mortgage crises is having a sliding structure to adjustable rates. Many people were able to maintain payments in the beginning of their home loan and were even able to live off their savings until their interest rate changed exponentially. Any change to a mortgage rate should have at least a 60-day notice so that homeowners are able to prepare for an increase. There should also come a time after consistent on time payments for a given time period where a person should be able to lock in their rate without having to refinance the home. ARMs currently changes despite payment history and property value and are usually due to the company or bank needing a cash flow. That is fine. However if a homeowner know the rate

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