Foreclosure Crises and the Effect on Affordable Housing Research Paper

Foreclosure Crises and the Effect on Affordable Housing - Research Paper ExampleThe low-priced lodging crisis is due to gap mingled with housing costs at one hand and household income at the other. Minimum wage does not provide enough income to a household so as to rent a two-bedroom home at the fair grocery rate. The gap is widening even more today. The paper explores the impact of mortgage crisis and resultant foreclosures on the availability of affordable housing. Housing Affordability is a National Issue Bravve et al. (2012) argue that almost all states in US are facing affordable housing crisis. In 2012, the average extremely low-income (ELI) household cannot afford to spend more than $505 on rent, as on average they will earn about $20,210. They further argue that nationally one-bedroom fair market rent (FMR) is $797 going up at $949 for two-bedroom dwelling much beyond the capacity of ELI households to pay. The gap has fully grown in the wake of the worst recession tha t US is facing currently. The crisis has caused most profound impact in certain areas where unemployment rate is high. In the aftermath of subprime crisis, ELI tenant faces tough time for an affordable housing in a rental market. The supply of low-cost rental units is fast shrinking as more housing units are converted to serve higher income households. ... About 8 million individuals fall in this category that cannot afford to pay rent above $209 because they forgather monthly federal monthly payment of $698 in the current year. Ironically, 57% of all recipients have only a single source of income. Based on this criterion, not a single county in the US can supply affordable housing. Moreover, the number of Americans subsisting on low-income are on the rise and the need for affordable housing will continue to grow. Housing Policy and its Effect on Affordable Housing Wallison (2010) puts blame squarely on the government housing insurance that led to the financial crisis and subseque nt collapse of the housing market that finally resulted into the depleted supply of affordable housing throughout the US. The housing policies created subprime mortgages and finally when the market started collapsing in 2007, the defaults on loans started taking place in masses resulting into thousands of foreclosures within a short period of time. A subprime loan is defined as a credit to those who have less than 660 FICO credit score. Even Alt-A loan is not considered prime loan due to some deficiency associated with it. Usually, Alt-A loans have low humble payments, or insufficient documentation with regard to income and employment details. In the current situation even Alt-A loans have the same default percentages as subprime loans. In the former(a) 1990s, the government pressed the government-sponsored enterprises (GSEs) Freddie Mac and Fannie Mae to lower the mortgage requirements so that more individuals could purchase homes. Under an affordable housing mission drive, Freddi e Mac and Fannie Mae started purchasing loans from the master key lenders