Proposed Solutions to the Foreclosure Crisis in America...

Foreclosure, the process of claiming the defaulted property to cover the cost of an unpaid debt, has hit America like a tidal wave. Considered to be a crisis and a major factor in the poor economic situation of today, there is no doubt that the current state of the housing market and the influx in foreclosures across the nation has had a dire impact on the American economy since the beginning of 2007. Strategies, policies, action plans, and all other means of organizing a recovery have been attempted, but to no avail. Not even Congressional legislation was able to revive the stalwart economy (although the legislation was not specifically targeted toward foreclosure practices or policies). The plain and simple truth is that no matter†¦show more content†¦Both organizations are similar, companies chartered by Congress and sold publicly, but both run against the traditional economic grain. The primary factor that reigns in private companies is risk, every move a company mak es has a risk of putting it out of business, and so they are forced to be responsible with the money of their shareholders. Freddie Mac and Fannie Mae bypass this by being backed by the government. Any organization backed by the government cannot fail unless the government fails, therefore allowing for more risk by the company. Unsurprisingly, this was exactly what the two mortgage companies did, by introducing adjustable rate mortgages to low income, and in some cases, no income debtors. These people had little means with which to pay off the mortgage, but they got the mortgage anyway. Eventually, the companies had to raise the interest rates, and the debtors got blasted. This set off the current mortgage/foreclosure crisis we find ourselves in today. While the cause of this crisis is easy to pinpoint, the solution cannot be condensed so easily. Government meddling has persisted since the Great Depression, and only by fully removing it can we hope to resolve not only the current crisis, but future problems as well. The solution won’t be easy, and even worse, it won’t be pretty. But in the end, every American citizen would have an equal opportunity, the basis of America since itsShow MoreRelatedProposed Solution to the Foreclosure Crisis Essay1250 Words   |  5 PagesToday’s America is in crisis; we are in a recession. The greatest factor driving this major recession is Foreclosure many Americans are forced to face every day. In simple terms, the foreclosure crisis was caused by greed in the banking industry and too much optimism of the American people. 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