Foreclosure Crises and the Effect on Affordable Housing Research Paper

Foreclosure Crises and the Effect on Affordable Housing - Research Paper ExampleThe affordable trapping crisis is due to gap between housing costs at one hand and household income at the other. Minimum wage does not provide enough income to a household so as to read a two-bedroom home at the fair market run. The gap is widening even more today. The newsprint explores the impact of mortgage crisis and subsequent foreclosures on the availability of affordable housing. Housing Affordability is a National surface Bravve et al. (2012) argue that almost all states in US are facing affordable housing crisis. In 2012, the honest extremely low-income (ELI) household cannot afford to spend more than $505 on rent, as on average they will earn nearly $20,210. They further argue that nationally one-bedroom fair market rent (FMR) is $797 vent up at $949 for two-bedroom dwelling much beyond the capacity of ELI households to allowance. The gap has grown in the excite of the worst recession that US is facing topically. The crisis has caused most profound impact in certain areas where unemployment rate is high. In the aftermath of subprime crisis, ELI renter 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 receive monthly federal monthly payment of $698 in the current year. Ironically, 57% of all recipients arrive at 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 policy that led to the financial crisis and su bsequent collapse of the housing market that finally resulted into the depleted supply of affordable housing end-to-end 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 at heart 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 want associated with it. Usually, Alt-A loans have low down 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 early 1990s, the government touch 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 relegating drive, Fredd ie Mac and Fannie Mae started purchasing loans from the original lenders