Monday, September 26, 2011
The Mortgage Fix That Could Stroke Spending
Due Sept 30, 2011. Does the American dream include home ownership? What should happen to the people who can't pay their mortgage?? Should the US taxpayers be responsible for people who can't pay their mortgages?? How should the US government handle the mortgage crisis to stabilize the economy??
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The American dream does still include home ownership.
ReplyDeleteA recent survey shows that 70 percent of Americans still consider home ownership a central part of the "American Dream" Nearly two-thirds of young people -- 65 percent of those aged 18 to 34 -- also consider home ownership to be part of the American Dream, even though ownership figures within that group have slumped since 1980.
http://www.huffingtonpost.com/2011/09/21/home-ownership-american-dream_n_973573.html
For people who can't afford their mortgage payments are just leaving their houses and mortgages due to the rising payments.
http://money.cnn.com/2008/02/06/real_estate/walking_away/
This website states that "Many buyers put little or no money down, so they don't have much invested in them. That leaves them with little incentive to keep making payments when a home's market value dips below the balance of the mortgage." Also trying to pay off a loan could be worse for borrowers.
I believe that taxpayers should only hope those households whose families lost their jobs and are actually having a hard time making ends meet. If a wealthy business owner buys a large house and his company folds, then I believe he should sell his house and move into a house that fits what he needs. The taxes would help low and middle class families and who can no longer support themselves which would prevent them from the house foreclosing.
The last part was hard to research. I stumbled upon the subprime mortgage crisis which is basically the indicator in our country that showed that there was a rise in subprime mortgage foreclosures. I would say let the banks deal with the foreclosures and stabilizing the economy but they kind of don't have any money at the moment. I found that in September of 2008 the U.S. government announced a plan to purchase large amounts of illiquid, risky mortgage backed securities from financial institutions, which is estimated to involve at minimum, $700 billion of additional commitments.
The Dropping mortgage rate mentioned in the beginning of the article reminds me of Ms. Meachum saying that our interest rates nowadays are rarely low. I think it will be a huge problem.
ReplyDeleteWith low mortgage rates, people would be more likely to apply for a loan thinking that they would be able to afford it(when the truth is that they are not most of the time). Although the banks aren't lending(I assume they have very strict guidelines to follow?), they are still making bad loans. Instead of punishing the banks for ruining our economy, the GSEs seem to give them a free pass. I think the foremost thing the bankers should do is to reevaluate their ways of lending.
The American Dream will always include home ownership. Even though the share of Homeowner's Equity has fallen to a historic low, people are still striving to own their own home. People want a place to call their own. The people who can't afford their mortgages should be helped by taxpayer money. When the price of your neighbor's house decrease, so does the value of your property. The US taxpayer money should be spent on helping those people and or families who have no means of paying for their mortgage (unemployment, disability, etc). Since the banks got us into this mess, it is our job to bail out the people who were uninformed when taking out such large loans on their homes. The US government should cut spending in extra projects that will not directly benefit the citizens. The tax bracket should be fixed so that more money is generated for the government. The government is the only way we can get out of this financial mess. We need to pay off the mortgages or bail out the banks so that people can get loans again. Banks need to lend out money to people, as spending will restart our economy. They just need to lend out at interest rates that are reasonable and consistent. People are starting to refinance their mortgages, which could save them 50-70 million dollars. This is a step in the right direction, but ultimately government intervention is the only way we can solve this country-wide problem.
ReplyDeleteThe American Dream does include home ownership. Since we do pay high taxes for our property tax. I think that we should have part of it to pay for others mortgage who may be struggling, but only for a month or two as a loan. Since banks are barely loaning any money right now, it would help the people who are struggling for awhile. If taxpayers don't help out and there is a foreclosure for homes in the neighborhood, it causes the value of the neighborhood to decrease including your home. The US Government should limit the amount of loans given out, but to the point where it is possible for the banks to start earning money again.
ReplyDeleteThe American Dream has in the past and always will include home ownership. Those who cannot pay their mortgage should receive help from the taxpayer's dollars. I think this is necessary because many individuals cannot pay their mortgage due to unemployment. The unemployment is beyond the control of the homeowner therefore they should not be forced out of their house due to this. The US government needs to set an interest rate that is logical and suitable for middle and low income families. Also the government needs to ensure that there are more jobs available so that homeowners can pay for their homes.
ReplyDeleteThe American Dream will always include home ownership. For individuals who are unable to pay their mortgages due to rising interest rates should take advantage of programs such as the Home Affordable Refinancing Programs. U.S. taxpayers should not be responsible for people who cannot pay their mortgages. Taxpayers are responsible for their mortgage, and if they have to give extra cash to this cause, the fate of their own payments will begin to suffer. In order to handle this crisis, the government needs to stop raising the interest rate, and also make it possible for more homeowners to receive loans from banks to help with the payments.
ReplyDeleteThe American Dream predominately includes home ownership. Those who have no way of paying their mortgage need some kind of stability and camaraderie the taxpayer's dollars can provide. To lift a large part of the population onto their feet would greatly affect us all in a positive way. Repeating what Zoey had said earlier, when your price neighbor's house decreases, or becomes negatively affected (like foreclosure) your property's value goes down with it. If the governments continue to place limitations and regulations on mortgage rates, interest rates, and availability to receiving help from HARP, the situation will not improve. They need to provide some kind of stability for these people to lean on.
ReplyDelete