Responses to Economic Recession to Help Homeowners Essay

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BAILOUT OF WALL STREET VS. THE INDIVIDUAL HOMEOWNER BAILOUT

Economic Bailout of Wall Street vs. the Individual Homeowner Bailout Proposal

Homeowners are always interested in safe financial arrangements regarding their mortgage plans. However, some of them who lack the important plans to be on the right track often end up failing to recover their homes from the mortgage lenders. It is in the occurrence of such misfortunes that the likelihood of losing the homes becomes real. This necessitates the role played by the government in restoring order and sanity back to the homes. Reasonably, there is a need to work in collaboration with the government because the same can do all these and bring to the attention of the leadership.

Bailout Programs for Mortgage Beneficiaries

The background of the circumstances leading to a bailout of the program emanates from the fact that there can be a problem with the income flows of the individual in question. This might occur due to the occasioning of two possible two causes. One that is likely to bring the disruption in income flows is the event of a job loss. This often happens when the economy is in shambles. For this reason, people have lost jobs in some instances because of the shaky and unpredictable economic patterns in the country (Cott, 2012). Homeowners who have had to live with the little income left after losing a job must be allowed to enjoy government support to meet their mortgage requirements. Those covered in this program also includes the mortgagees who in a way have ended up having negative equity. The current arrangements in the mortgage plans offered by the government are in the form of loans and grants. The two options have been adopted to address the same problem of income challenges that the people face and at the same time bring out a case of a better plan for those who are seen as the poor and unemployed in the society. People who have been involved in programs touching on the well-being of the financially unstable individuals must have fallen to these programs. This paper discusses the importance of the two mortgage plans in coming up with what is needed in life.

A government payment --sharing plan through loans

This plan allows the mortgagees to seek government support in bailing out their homes after their economic strength has gone down the drain. Therefore, it is important to engage the rest of the people in plans in matters that relate to the occasioning of a bailout every time the country goes through a hard economic period. While seeking to fulfill the needs of those who have had a chance to develop their finances well but have had a temporary job loss will, loans be availed to them. In this program, the government comes in to assist the people meet the mortgage payment requirements (Dennett, 2007). The government pays part of the mortgage for the individual to an amount not less that 25% of the total amount. This reduces the monthly contributions that individual citizens pay to the mortgage plan. Therefore, it is important to have that is necessary to ease the way for the homeowners in financial distress. This arrangement is much better than a foreclosure program since this saves the individual the problem of having to dispense an unaffordable large amount of money on the mortgage during this time of financial crisis.

Individual homeowner bailout through government grants

Government grants are also available to the people who cannot meet the objective of financing their mortgage plans. It is an arrangement where those who have lost jobs or have not been successful to get homes can access government assistance towards the payment of such monies. The advantage of this, on the homeowner's side, is on the fact that he or she will not have to pay back to the government once the situation normalizes. It is a complete grant that meets the desires of everyone in the leadership circle. With such a program, the government is now able to deal with the challenges that face the disadvantaged members of the government as noted. The government grant is temporary and ends when the income of the individual has been restored or after a period of two years, whichever comes first. This time is long enough to restore the income threshold status that an individual needs to meet the basic issues of life (Melton, 2007). Despite its leniency, it has been unlikely to have people staying unemployed to take advantage of this program.

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As a way of managing the program of non-employed people's desires to have homes, the government has been using programs like this to allow the have homes and live a decent life as they wait to be given a chance to experience better life ahead.

Wall Street Bailout

This bailout program was formulated during the 2008 financial crisis that rocked America. The government wanted to have those distressed assists such as homes bailed out as much as possible. It came after the Senate approved the acquisition of estranged property to the government as a way of relieving the owners of the financial burden. Even thou the acquisition was not to fully to transfer the ownership of the property to the government, it became evident that there must have been a case of better developments for the government to save the people of the hardship problems that they had gone through (Martin, 2010). Treasury Secretary was given the sum of 700 billion dollars to execute the program that was geared to make the economy restored its initial position. The arrangement came as a parallel program to the individual bailout program that had been formulated earlier on.

Comparison

The individual bailment and the Wall Street program had a common objective. This was to restore the economic situation that had gone to the dogs. Both programs had an objective of restoring the dwindling housing sector through measures that were seen as economical and at the same time prudent. As a tailored program, it was in the need to be right with the pattern of the economic developments. There was a commonality in the way things were done during the implementation process (Melton, 2007). Both the homeowners and the mortgagees were to benefit in the programs. The role of the government in both programs was to compensate the homeowners by paying them what the mortgagees could not. This made it easy for everyone in the country to weather the storms of the great economic crunch that had dominated the country's economy. It became easy to handle the challenges that had been witnessed in the economy especially from the fact that there had s housing problem that had threatened the whole economy. Those who had privately owned homes were better than those who had to take mortgages. In the spirit of being right with the government, the lenders cooperated, as they wanted the exercise to succeed. Both options in the individual program shared a common objective with the Wall Street bailout.

Contrast

Differences between the two bailouts programs exist. The use of the Wall Street bailout was more of a reactionary and short-term measure. This is because then amount set aside for this purpose was so fixed at just 700 billion dollars, considering that the problem was all over the country. There was no assurance of how long it was going to take to recover the economic status that had been lost at that time. On the other hand, the individual bailout was tailored to prevail for as long as there was a housing problem in America. It was not limited to the time of the recession, as the government had devoted to being helping the people who faced hardships to move through the economic challenges that faced them with ease.

The management of the Wall Street bailout was to be done by the Committee of Recovery from the Treasury. This was planned so since the department has all the facts about the economic conditions in the country. In contrast, the individual bailout was the responsibility of an interdepartmental agency that comprised of the Treasury and the Housing Department. It was more promising and better to work with the new plan that had been done by the interdepartmental program. The housing regime in the U.S. just moved from the hands of the federal government per se but to delegated agency.

The Wall Street program and the individual bailout program was both geared towards helping the people manage their housing program much easily. It gave them the chance to manage the programs that were set out for every person as regards the constitutional right to own a decent home (Wilson & Ron, 2009). In light of this, today's housing program has evolved to accommodate every American. The fundamental right, owning a decent home, as enshrined in the U.S. constitution has been actualized using these two programs. Housing is a priority to every citizen's life.

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