Since early 2007, a lot of people have been having trouble with upholding the equity of their homes. As each day passes, the homeowners are forced to withdraw from mortgage payments. During the previous year, the real estate industry had hit new heights. Everybody who ever dreamt of owning their own houses could not do so. In addition to owning their own houses this was a form of investment that would yield profits in future. This led to a number of people securing mortgages only for their actions to come back and haunt them in the next year.
Since the value of their homes was deteriorating, the homeowners were trying to get rid of the financial commitments by opting for foreclosure. What people failed to see was that to finance America mortgage actually meant emancipation from the pending economic crunch. The affordable mortgage companies operated by maintaining themselves with the profits they obtained through their services. The rate of foreclosing was so high that two of the main mortgage companies were faced with financial difficulties. The American government was forced to provide funding for the struggling companies. This move was an attempt to improve investor confidence.
Existing loans were re-financed so that the home owners could be offered payment plans that were more affordable. Other ways of reducing forecloses were also adapted. If the rate of foreclosing was to decline the real estate industry would have had a fighting chance.
Most people questioned the government’s decision to finance American’s mortgages. They wondered if such bailouts offered lasting solutions to the struggling mortgage companies. This lack of conviction in the government’s decision did not prevent the market from experiencing an upsurge. The solution offered by the bailouts is believed to be short-term.
The cheap mortgage companies should prove that they can fully operate on the profits they earn from financing the public at cheaper rates. Despite being non-profit organizations, the tax payer should not have to bear the brunt of their financial obligations. Bailing out mortgage companies might become the norm in the real estate industry. This is because the companies will always have a fall back plan in case things get worse.
A better way of handling the situation would have been by letting the companies find their own footing in the midst of their financial crisis. The companies would have merged into one and found a way to cover the deficits caused by defaulters. According to experts a change in strategy would have also been a logical move.