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% and 861,664 families lost their homes to foreclosure in 2008 (Les Christie). Also, 54 households received a foreclosure notice last year (Les Christie). So what is the solution?
Bold action is needed to address this serious issue. I suggest a “real estate pause” for a temporary amount of time, similar to what Roosevelt did with the “bank holiday” during the Great Depression. The root of the foreclosure problem is that people who should be living in homes valued at $200,000 or lower are living in over $500,000 homes with “house poor” mortgages. Many Americans like to live above their means and now the real estate market and all Americans are paying the price. The result is that many have to accept bankruptcy or short sales. My “real estate pause” idea is to close all interactions between the banks and new homeowners that are seeking to buy above their means. I understand that we cannot shut down all the real estate offices in the country, but the goal is to eliminate the loans that made the foreclosures a reality. My “real estate pause” solution consists of three principles. First, banks need to stop financing home buyers for more than they can afford. Sellers need to be aware of their buyers so that the home does not go onto the foreclosure list. Second, banks must only approve mortgages for homes that have been correctly and fairly priced to preserve home values. Many Americans right now are selling their homes for a depreciated price so that they can get out before they start losing even more money. Until buyers start buying the houses at the correct value, the mark…
…. The cycle needs to stop now before Americans start losing hope in the real estate market for good.
The foreclosure crisis will not end easily, and it is up to all Americans to do their part to prevent another crisis. The problem is linked to cultural values that equal success to possessions. We are not satisfied unless our homes and cars are better than those of our neighbors. This idea of wealth and the value on material possessions instead of family and a job got all of us into the problem. Now everyone needs to do their part to stop it again. Ideally, the current foreclosure crisis that has affected all Americans could result in a cultural shift to value family security and fair business practices over possessions and net worth. I believe that this plan would help to stop the foreclosure crisis and possibly prevent one in the future.