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economic crisis 2008 and housing
mortgage foreclosure crisis of 2008
foreclosure crisis in america
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Foreclosure is the process in which an estate which was brought through a mortgage is taken over by the lending company. It results in denying the homeowner the right of the estate, for example, the homeowner is not allowed to redeem the estate. Currently, there is a dramatic increase in cases of foreclosures with more than 4% of 120,000 homes in America experiencing foreclosure. Although some of the homeowners are able to tackle the problem, a majority are faced with the problem because they delay or are seriously behind in paying their mortgage. The process of foreclosure starts immediately once the homeowner misses the mortgage payment at the expected time. Failure to pay at the stipulated time may be due to joblessness, divorce, medical problems, conditions of the loans, and death (Laing, 2009).
Foreclosure is the current threat to the United States financial market and the economy. The advertisement of foreclosed homes which are being sold is causing a decrease in home prices and lowering the values of homes which are in the neighborhoods. Because of this, consumer expenditure has suffered seriously and the situation has worsened financial crisis with the Americans watching the value of their valuable properties, their homes lose worth. The same experience has been observed in $1.5 trillion of securities supported by subprime and the same mortgages have constantly reduced in value resulting in the loss of capital for most banks at a faster rate than the rate at which the government is replenishing them as provided by the Troubled Asset Relief Program (TARP) (Laing, 2009).
In an effort to find a solution for the crisis, treasury department proposed to urge the banks to provide low mortgages of about 4.5%. The step was view...
... middle of paper ...
... would afford a win-win situation for the government and the homeowner.
Works Cited
Armour, S. (2009). Foreclosure crisis spreads from subprime to prime mortgages. Retrieved on
December 17, 2009 from:
http://www.usatoday.com/money/economy/housing/2009-06-08-home-loan-foreclosures-
subprime_N.htm.
E1Boghdady, D., & Cohen, S. (2009). The growing foreclosure crisis. Retrieved December 17, 2009
from: http://www.washingtonpost.com/wpdyn/content/article/2009/01/16/AR2009011604724.
Grow, B., Epstein, K., & Berner, R. (2009). How banks are worsening the foreclosure crisis. Retrieved
On December 17, 2009 from:
http://www.businessweek.com/magazine/content/09_08/b420034085635.htm.
Laing, R. (2009). How to solve the foreclosure crisis. Retrieved December 17, 2009 from:
http://online.barrons.com/article/SB122853114366984933.htm#articleTabs_Panel_article%3D3
As of December 29, 2009, the website Foreclosure.com reported that over 2.2 million homes in the continental USA are in some form of foreclosure, 486,323 are in pre-foreclosure and 465,490 have already been foreclosed. Over seven hundred thousand have tax liens against them and 87, 389 have been sold in Sheriff sales. Along with the homeowners, mortgage companies and banks have suffered tremendous financial loss. However, the homeowners lost so much more; they not only lost the roof over their heads, but memories, their self-esteem and their piece of the American dream.
The frequency of foreclosure in our nation today is dangerously high. The strain from the recent economic downturn has put many families and individuals in a financial chokehold preventing them from being able to make their monthly mortgage payments. Consequently, many of these people feel they’ve punched a one-way ticket to foreclosure. With all these homes being foreclosed on, we face a very real crisis.
The foreclosure crisis has been devastating. Families no longer able to afford mortgage payments are forced into bankruptcy, while banks find themselves with properties valued at less than the loan principal. Solutions proposed thus far have primarily focused on loan re-modification measures that only slightly relieve the financial burden for homeowners and frustrate lenders who are forced into less attractive loan terms. However, one solution not being discussed in congress may resolve the housing market slump while benefiting families and investors alike.