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Solving the Foreclosure Crisis

As I was at a local Starbucks the other day, I couldn’t help but eavesdrop on a conversation between two people.  They were talking about buying a home and one of their neighbors was recently foreclosed on.  A large gap had formed in line while I stood there carelessly and listened intently.  As the conversation continued, the mood grew somber as they realized how sad it was for a family to lose their home.  There are a lot of individuals and families that have lost their home, but that isn’t the case for every single situation.

I’ve said this before and you have probably heard in the news and through the grapevine that some took advantage of the situation and reaped the benefits.  Falsifying their loan application to afford a larger home, then squatting in that home for up to 18 months mortgage free before the court forced them out of the home.

It’s interesting to hear everyone’s perspective of the real estate market.  Most form their opinion from listening to the news, friends, co-workers, and the skewed outlook in the newspapers.  I can’t see the real estate market getting any better in the near future so it lead me to think of some ways to solve this issue.  However, like any solution not all parties are going to be happy.

1. The banks could refinance everyone’s loan at the incredibly low interest rates at the moment.  This would put money in homeowners pockets and in turn hopefully boost consumer spending.  The one downside is that there would still be a handful of people underwater.  You also have to imagine that taxpayers do not want to spend any more money.

2. Lenders could catch the “Christmas Spirit” and forgive principal. However, the chances of lenders doing this are very slim.  They have been opposed to this when the government took a hit and shared their losses.

3. Do nothing and wait for the market to rebound.  The job market is getting better and there is a direct correlation with the housing market when people have stable jobs.  However, who is to say that we won’t slide back into a recession?

America is becoming numb to the word “foreclosure” and it’s becoming a fact of life.  The “Jones'” are not the “Jones'” anymore.  Families that look financially stable on the outside are hurting behind closed doors.  However, a foreclosure isn’t what it was 10-15 years ago and people can move on with their lives.  I hate to say this, but there will continue to be a constant flow of these homes flooding the market for a few years.

Here are some Foreclosure properties in the Fairfax area:

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