Free Breaking News

Housing Foreclosure Crisis in USA Threatens Financial Stability

The complexity of the causes of housing foreclosure crisis trims down to one simple origin-mortgage. From this mortgage emerges the root of financial instability and catastrophe.

Housing foreclosure crisis peaked from 2005-2006 in USA specifically in California, Florida, Michigan, Nevada, Colorado, Ohio, Georgia, Arizona, Illinois, and Indiana. There are still an estimated 5 million foreclosure cases in the said country. With this huge number, the national government of USA is formulating variety of solutions to the impending foreclosure cases.

But, how did this housing foreclosure crisis threatened the entire global financial stability and economic growth of USA? There are various studies which explains the causes to this inevitable circumstance, it include the inability of homeowners to make their mortgage payments, due primarily to adjustable-rate mortgages resetting, borrowers overextending, predatory lending, speculation and overbuilding during the boom period, risky mortgage products, high personal and corporate debt levels, financial products that distributed and perhaps concealed the risk of mortgage default, monetary policy, international trade imbalances, and lack of government regulation.

Another unspoken cause of the crisis could be the greed of the investors and the bosses of financial firms who choose to gain more money at the expense of the American people. For years, the economic bubble had been on the brink of collapsing as a result of inflated lending schemes. These went unnoticed since everybody was kept contented with huge lumps of bonuses in their accounts as long as the money was kept rolling. But when push comes to shove and interest rates became unbearable, everybody suffered especially the common public, for if the investors and bankers have something to back them up, the common person have nothing that was left to them.

Such mistake by a few was felt by the entire business world all around the globe, from billionaires to simple businessmen, the effects of the economic crisis was felt. This led to the devaluation of several companies that had been the cornerstone of the American economy. Such weakening threatened to make things much worse than the “Great Depression” experienced more than half a century ago. Only a piece of hope was seen through the large scale bail-out plan that seemed distasteful to some, and now, the economy seemingly began turning around for the better.

It happened once, it happened again, and what’s keeping an economic crisis from never happening again? Several economists urged the government and the lending companies not to be lenient in lending and refrain from overspending funds in unsure lending investments. But as long as people see the economy as parallel to a casino game where in the gain seemingly outweighs the risks, another crisis like this can always be expected. It may not be today, not next month or the next couple of years. But it will be during a time when people are once again complacent with their lives with a mindset that nothing can go wrong. That’s the time when something will go wrong.

Resources:

http://en.wikipedia.org/wiki/Foreclosure

http://www.foreclosurefish.com/blog/index.php?id=379

May 28, 2010 Posted by FreeBreakingNews.org | Ecomonics | and Indiana, Arizona, California, Colorado, economic crisis, Florida, Georgia, Housing Foreclosure Crisis, Illinois, Michigan, Nevada, Ohio | Leave a Comment