Many cases have gone to trial concerning reverse redlining including Mayor and City Council of Baltimore v. A mortgage mitigation plan that embodies these moral hazard-deterrent goals entail the following: The bankruptcy laws should be amended such that mortgages may be modified by a Judge.
If the housing market trends continue to deteriorate, the middle class — most notably middle class minorities — will sink and, as Adam Smith would attest to, our country will not be that which it was founded to be.
The middle class offers jobs, it acts as a magnet for pulling up those in poverty, it is the reason voting is effective and it is the reason why we are and why we function as a democracy.
Velasquez Institute found that said minorities are also two to nine times as likely to have high-cost mortgages. It is difficult to determine whether helping all those who are underwater is just, and the increase in taxes will definitely step on the toes of those who have been faithfully paying their mortgages and properly bearing responsibility.
A report by the William C. It tears the social fabric, disrupting the middle class and, likewise, social stability. But it is possible to refinance your home with a mortgage that has the same one-in-five chance of putting your family out on the street—and the mortgage would not even carry a disclosure of that fact.
This is unsustainable economically and socially. A simple example of this exists in insurance: What happens when a residential home is foreclosed on goes beyond blatant economics to delve into the very texture of the social fabric, piercing the heart of the American dream.
When the house sells, contingent on said amount able to pay, the owners will get percentages of equity respective to the percent paid on either end. Just as in the previous example, finding information may seem intimidating to some, and to others it may actually seem negligible until adverse conditions arise.
Bail outs are superficial and short lived; we need a permanent, long-term solution that yields a steady recovery.
GE Money Bank, et al. Also in this scenario, homeowners are assisted, but not completely bailed out in consideration of their ill-informed, impoverished decision making combined with the inability to project future market conditions, job scarcity and subprime predation.
Moral hazard, foreshadowed by optimization algorithms and guided by contract theory, leads to adverse selection and systems of asymmetrical information, which, in the context of loans, amount to a volatile market for both lenders and borrowers.
White flags are not an option here: By fighting for the end of the foreclosure crisis, we are fervently saying that nothing can suppress the American dream. Unfortunately, there is no magic bullet for the management of the housing crisis.
With it we can predict and avoid housing bubbles, expect greater stability in the housing market with sound liquidity and witness a subsequent dramatic decrease in nationwide foreclosure activity.
This plan will prove more elusive to moral hazard than universal bail outs, and it will keep parties in check with handling credit responsibly.
To keep consumers, notably subprime borrowers, informed about credit management by utilizing target marketing tactics and free counseling services the latter already being offered by the U. To begin, we must teach society to make informed decisions.
Investors, lenders and homeowners, if found to have had malicious intent, will have to live with their losses. In this time of economic crisis we must tread carefully but quickly as the housing market loses liquidity, home equity plummets and borrowers with adjustable-rate mortgages are hit both by rate resets and job scarcity.
The plummeting housing market has had a disproportionate impact on minorities, the most negatively affected groups being Hispanics and African Americans. We must inform minorities that resources such as free financial counseling offered by Making Home Affordable exist, and that utilizing them is easy and valuable.
If an ARM is taken out, the typical new owner will be feeling great with a low rate and low payments for the first three or so years. The dynamics of the market must be considered: The reversal and altering of these previous deleterious programs and practices has been met with challenges.
When the man suddenly develops shingles later in life due reactivation of latent VZV he may experience residual nerve pain for years. Wells Fargo Bank, N. The solution to managing nationwide foreclosure rests in 1. This person is less likely to immediately turn around than someone without insurance.
Similar to the HOLC, if a medium sized subsidy is given to a federal institution to re-assess loans at current market value i.
Thankfully still unprecedented in economic catastrophe, the Great Depression presents an exemplar paradigm for what must be done to avoid economic disaster. The institution s must be funded by the federal reserve. Foreclosure presents an austere barrier to the fundamental concepts of American culture.
We can reinstate an architecturally sound plan for the future of Americans by re-enforcing the rickety subprime-scaffold to rest on a more concrete foundation, by addressing the present crisis with a comprehensive loan reassessment and by making it a priority in keeping consumers informed.
Risky behavior is not to be rewarded.Feb 02, · Essay: Politics/Economics: The Foreclosure Crisis (A Naive Proposed Solution!) The land of the free, the place of opportunity and the previous worldwide sweeping epitome of prosperity is now facing an acute, systemic ill: the foreclosure of millions of homes.
A Solution To the Foreclosure Crisis Essay Words | 4 Pages. The foreclosure crisis has reached new heights since the all-time high deficit in the economy. U.S. foreclosure rates went up more than 81% andfamilies lost their homes to. Solving the Foreclosure Crisis Essay numbers of home foreclosures since to has grown fromto million, which is an expansion of more than five times (GDAEman ).
This skyrocketing dilemma has many factors that contributed to its epic growth, and much needs to be set into practice before the housing market turnaround. Solutions to the Foreclosure Crisis: Refinancing Essays - Because homeownership is central to a family’s security, well-being, and long-term asset accumulation, the foreclosure crisis must be attacked aggressively by Federal and state governments.
Solving the Foreclosure Crisis Essay. Creating a system of open and honest communication and shared accountability between mortgage lenders and borrowers one to another is the first step in solving America's mortgage crisis.
foreclosure and to prevent a similar crisis from occurring in the future. The forum consisted of three panels: (1) a panel providing new data from AARP on the impact of the foreclosure crisis on older Americans; (2) a panel on legal and other.Download