Essay on Solving The Foreclosure Crisis

975 Words 4 Pages
There is no question that foreclosure is bad for our economy and our country. Many experts believe that the current economic crisis that we are experiencing was the result of home foreclosures. Last fall the number of home foreclosures all over the country reached all time highs.

Some people think the problem began a few years ago when lenders, realtors, and home builders thought it good for everyone to own a home. There were even government programs which encouraged lenders and borrowers to buy and finance homes. Advertisements proclaimed that “why should we pay rent when we can make house payments and own our own homes, and build up our own equity.” So home buyers were purchasing homes in record numbers. Because of the
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The house then becomes the property of the United States. It is known as a HUD home and then sold by the federal government by silent bidding usually for much less than what the mortgage was. When there are a lot of foreclosures of these kinds of homes, our government loses money. This adds to our economic issues as a country, meaning that because it is our country, we all lose money in tax dollars.

If the home is a conventional loan, the bank must resell the home themselves. When there are a lot of foreclosures it is extremely unlikely that the mortgage company can sell it for the same or more than they are owed on the home. Therefore, the mortgage company almost always loses money on foreclosures. When there are a lot of foreclosures, the value of properties goes down. This is especially true when many of the homes were overpriced. These homes are considered underwater because they are worth less than the mortgage that’s owed on them. When there are a lot of foreclosures, mortgage companies are in deep trouble. That is just what happened, lenders went bankrupt. This issue is among one of the main contributors to the national issue of the recession.

With the slow down of the economy last year, many people became unable to make their house payments. The mortgage companies began foreclosing in record numbers. Mortgage companies were

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