Resolving the Foreclosure Crisis Program Essay

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Resolving the Foreclosure Crisis Program The current economy has made it difficult for families, especially those that purchased their property during a fruitful period, to continue to afford their homes. Many Americans are suffering the loss of employment and other financial hardships, which make it near impossible to stay on top of mortgage payments and continue to survive. At the same time mortgage companies have been hit hard with no real end in sight. For a lending institution to take over a property, or foreclose, is a costly endeavor and one that is devastating for both the lender and the homeowner. There are three components to this resolution, based a very basic concept, how to keep the homeowner in the property and …show more content…
A home that was purchased at $500,000.00 during a booming economy, with a mortgage of $400,000.00, is no longer worth the purchase price and in most cases not worth the mortgage amount. This home may have a current market value of $250,000.00, while the mortgage amount is still $400,000.00. The question is not how to get the homeowner out of the property and attempt to sell it. The question should be how to keep the homeowner in the property and the lender to feel some relief. Therefore, offering the property to the existing homeowner at the fair market value answers this question. By basing the mortgage on the current market value rather than the mortgage amount, the home becomes affordable for the borrower. On the surface it appears that the lender is losing $150,000.00 but in essence they are saving the costs associated with foreclosing, property maintenance and receiving the same price at which the property would sell for. Putting these two recommendations are of no assistance to the homeowner that is unemployed with no prospective employers in sight, or having to work for minimum wage outside of their career. To complete this resolution, mortgage lender guidelines need to be re-calculated. Former guidelines were 28/36 debt to income ratios, with many lenders allowing higher ratios. This program allows for a principal, interest,

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