If the house is being over paid for then the house will be greatly losing money each month. This will steer them into debt and soon be forced to foreclose. Claudette showed this when she answered “lost equity, plummeting housing market, and job loss. People couldn’t spend like they use to and had a new worry of keeping their job through the problem. ” This shows that there are many different variables affected when this happens to your home besides it just isn’t what it used to
Failure Analysis and Change Strategy LDR531 September 2, 2013 Failure Analysis and Change Strategy Failure and Success Indicators One of the causes of the economic downturn that the United States experienced was individuals defaulting on mortgage loans that they either could not afford or had little intention of actually paying for in the first place. However, the reason they were able to secure these loans in the first place was because of banks like Countrywide decided to approve everyone they deemed willing to make a mortgage payment, regardless of their credit history. In fact, the former co-founder and CEO, Angelo Mozilo, even described his company’s loan approval process as “arduous […] and cumbersome,” especially where the manual approval process was concerned (Englund, 2008). The truly disturbing thought process which should have portended failure was that Mozilo states that many people are approved through the manual process because the “human underwriter, has analyzed non-traditional factors such as the borrower’s rent and utility payment history” (Englund, 2008), but he wants to do away with the human underwriters in favor of an entirely automated system that would have to have inherently lower standards for approval. Ultimately, what caused Mozilo’s, and subsequently Countrywide’s downfall can be attributed to greed and other unethical behaviors.
People were buying houses with variable interest rates. Businesses were booming. When consumers were not able to pay back all the money borrowed, society took a hit. People were going into foreclosure, and banks were left with many empty houses. Prices climbed to make up for losses.
In “How Class Works,” Wolff points out that class segregation, income inequality, and the trends of industrialization and outsourcing terminate the income growth for middle class Americans and put them in credit crisis (Wolff). Since most of the resources are held by the richest ten present, the rest of the Americans become lacking access to services and goods (Wolff). However, financial shortages seems never decrease people’s demand. Since 1970s, middle class Americans started to rely on credit and mortgages, even though they knew they were unable to pay the money back in time. Failing to make payments in time, growing number of houses face foreclosure, creating homeless citizens and, ironically, empty houses.
III. Conclusion What the consumer should be looking for in the future to avoid similar collapse of the housing market. More than 2 million borrowers will lose their homes to foreclosure because of subprime mortgage lending in recent years. With the housing market booming, lenders enticed many lower-income people into buying homes they couldn't afford by offering adjustable-rate mortgages (ARMs) with temptingly low initial teaser interest rates. Many loans didn't require down payments or documented proof of income.
Bartender Bailout The Missing Piece of the U.S. Economic Bailout Plan By: Derek Hubenak Bartender Bailout: The Missing Piece of the U.S. Economic Bailout Plan The United States congress decided to enact an economic plan to rebuild the U.S. economy and, in turn, has directly affected my income extensively. I have seen the effects of our economy slowing as consumers hold tight to hard earned money because of a fear the markets may crash any day. The Dow drops continuously and consumer spending drops just as fast. One can not thrive without the other. The US economic bailout plan is unethical and outright criminal.
3. The best use of credit is a home mortgage. 4. Credit card blocking is the process used by companies when a large purchase is made to ensure they will be compensated for that money. 5. The greatest disadvantage of credit card use is that they are inviting cardholders to spend money they may not have.
Possibly the most important showdown was the debt-ceiling fight of August 2011. It “threatened the country's ability to meet its financial obligations and resulted in an unprecedented downgrade in the U.S. credit rating by Standard and Poor's. The subsequent failure of the bipartisan super-committee to reach a deal on $1.2 trillion in targeted budget savings over ten years unleashed automatic spending cuts for both defense and non-defense spending”
“The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little.” (President Franklin Delano Roosevelt) What great words from someone who understood what the American economy would be like in the future. He knew that there would have to be some relief for low income families. In 2008 the poverty level was extremely high, 40 million people were living in poverty, and some were children under the age of 18, poverty increased from 18 percent to 19 percent in 2008. One of the most useful tools for combating poverty is the U.S. tax code. Unfortunately for too long tax laws in the U.S. had been written and written again for facilitate benefits flowing upward, disproportionately enriching
Save for emergency funds: cover unexpected expenses such as a. sudden job or income loss b. medical emergency c. financial crisis d. You all know that the main cause of the 2008 financial crisis was the increase in the default of loan mortgages made to borrowers with poor credit ratings, but according to a study followed by The University of Harvard, called The State of the Nation’s Housing, “if there would have been a bigger saving money culture and usage, the crisis could have been two times smaller.” 2. Save for retirement: put money to work for you, whenever you retire, you will have funds to cover your expenses. 3 Save for sinking funds: money set aside for a. future repairs b. Improvements on your possessions 4. Save for education: a. to earn your masters