Real Estate Foreclosures Essay Example | Topics and Well Written Essays - 1250 words

true(a) Estate Foreclosures - Essay ExampleThrough foreclosure process, banks or creditors can recupe outrank the possessions of owner if he/she is unable to fulfill the contract of mortgage give. As the financial crisis has occurred in the USA, the total of foreclosures have increased. Several banks such as Bank of America, JP Morgan Chase, and Ally among others had announced foreclosures against the homeowners who failed to repay the loan amount. Real Estate Foreclosures and the Financial Crisis The unreasonable strategies of financial institutions in the USA had al scummyed many people to purchase houses which they could not manage to pay for. It was unwise for people to think that house prices pull up stakes only increase and as a result people started to take loans and purchase property from them in the prediction that the cost will increase in future, which will make it easy for them to repay the amount. When the bubble burst, the house price began to strike considerably and several home owners were trapped unexpectedly to pay for the loan amount. As people tacit that they will lose more money by selling their property compared to the loan amount, they foreclosed. The increasing rate of foreclosure had freaked several banks as well as hedge funds that had already converted the loan amounts to securities and apprehend large amount of losses (Edmonds, Whats The No. 1 Reason for Foreclosure?). According to Mortgage Banker Association (MBA) to a senior higher place 900,000 households had foreclosed in the year 2008 which was 71% more compared to 2007. It was recoded as highest foreclosure rate over 36 years in the US economy. The main reason for foreclosure was the attitude of people of maintaining lifestyle beyond their affordability. The subprime loans frequently arrive with low preliminary interest rates and thus people with less affordability are the key receivers of it (Edmonds, Whats The No. 1 Reason for Foreclosure?). Causes of Foreclosures T he unconscious purchasers of loans are liable for foreclosure crisis in the USA. In order to benefit from the large loan values, people had chosen several dishonest paths such as fabricating their income, and increasing the values of pledged properties. The lenders had overly avoided taking necessary actions against such conducts and made this happen. Generally, people are not very aware somewhat financial details with respect to planning their own revenues. They were simply attracted by the smartly influencing media and thus a lot fall for overwhelming mortgage culture. The leaders and politicians were more engaged with spending more amounts compared to tax revenue. The high expenditure had resulted in deficit of budget. In order to deal with the deficit, government had produced more currency which brought pompousness and the value of Dollar fell significantly. As a result, the prices of essential goods increased and ordinary people became unequal to(p) to cope up with the hig her inflation rate. The expense for mortgage amount increased due to fluctuate interest rate and foreclosure was the end result of it. Several unethical decisions to deal with the deficit of budget such as borrowing money from overseas countries and spending excess money on war had dissipated the economy of the USA (Vidmar, Seven Ways Foreclosures Impact Communities