The Foreclosure Crisis That Will Not Go Away

A great column appeared in The Huffington Post by David Coates, discussing the ongoing foreclosure crisis and what isn’t being done to fix it.

Two excellent points worth noting:

1) We’re past the point where those in need of assistance are the reason for our real estate woes - i.e., they borrowed more than they could afford, etc. We now need new policies that assist those who are casualties of the real estate crisis, not causes of it.

I’ve long been a proponent of principle reductions – they give those struggling with payments a legitimate chance to keep their home and they give those who view their home as an investment gone bad a reason to stay.

2) By making it more difficult to get a mortgage, the growing inventory of available homes will take decades to shrink down due to the lack of demand.

Yes, unemployment may continue to be the main culprit for slow home sales, but tighter lending practices are equally responsible. Certainly, we can’t go back to providing $500k mortgages to people who make $30k a year, but we can begin making sensible, responsible loans again…