Owning a home is an integral part of the American dream. But this year alone thousands of homeowners across the country face foreclosures. It is inevitable to see the high rise of home mortgage foreclosures nationwide. A record number of homeowners are now defaulting on their loans and risk losing their homes. According to the Chicago Sun-Times (2007) there were 6,339 foreclosures just in the City of Chicago as of Dec. 2007 (Golab 7). Despite the huge number of foreclosures, however, Congress appears to be in no hurry to help. There’s nothing being done and the problem is not going away by itself.
Much of the turmoil is due to the United States mortgage finance system. In particular, the adjustable rate mortgage loans. An adjustable rate mortgage loan (ARM) is a mortgage loan where the interest rate on the note is periodically adjusted based on financial index (Anken 26). According to Peter Abken (1991), author of this is done to ensure a steady margin for the lender, whose own costs of funding will usually be related to the index (Abken 26). Consequently, payments made by the borrower may change over time with the changing interest rates (Abken 26). This gave many borrowers a false sense of what was affordable, these adjustable rate mortgages loans were made available to people with low income and bad credit. As a result when mortgage payments skyrocketed, families could not afford to pay their mortgage, leaving tens of thousands of borrowers unable to keep up, therefore, on the verge of loosing their homes.
According to the Noell Knox (2007) form the USA TODAY, nearly 16% of subprime borrowers are behind on their ARMs. For instance, Ann Zimmerman (2007) from the The Wall Street Journal shares the story of Mr. and Mrs. Harriman, a New York couple who are trying to hold on to their 1,100 square-foot ranch in Long Island (Zimmerman B1 2007). The unreasonable increase in payments, due to the rate increase has made it impossible for them to keep up with the payments. In the last month their monthly mortgage interest rate rose by two and a half points, that’s an increase of $800 dollars a month leading them to a potential foreclosure (Zimmerman B1).
In addition to adjustable mortgage loans, refinancing has also led many homeowners into debt, later resulting in default on mortgage payments. Many homeowners refinanced with a larger mortgage, one reflecting the property’s greater value, expecting the value to keep rising (Zimmerman B2). Borrowers would payoff the original smaller mortgage and pocket the rest, a process called “cash out refinancing” (Zimmerman B2). However with the decrease in home value has made it very difficult to cash out, especially those of low and middle income households.
In an August issue from the USA TODAY, Noell Knox (2007), reported that “some homeowners with dangerous subprime adjustable- rate mortgages will be able to refinance before they lose their home to foreclosure, with the help from President Bush” (Knox 1A). President Bush’s proposal suggests raising loan limits. Currently the maximum loan the FHA can guarantee is $202,000 in most states, and up $362,000 in high cost states such as California and New York (Knox 1A). Bush’s reforms will extend the loan limit to $262,000 in most states and $417,000 in pricier areas (Knox 1A). This proposal is expected to help and estimate of 80,000 homeowners with bruised credit and subprime ARM’s they can no longer afford (Knox 1A).
However in order to qualify for the new benefit, homeowners would have to prove they paid their loan on time before it reset to a higher rate and must have at least 3% equity in the home (Knox 1A). President Bush also asserted that he will call on Congress to pass his proposal to reform the FHA and broadened the lending criteria (Knox 1A). Despite President Bush’s effort his proposal has incited much criticism. Such as those of Peter Wallison of the American Enterprise says, in retaliation to Bush’s intervention and proposal, “This will only cause the problem to rise again. If we are going to allow (lenders) to be refinanced out, what we’re doing is saving them from their own greed ….It might be good politics, but it’s very bad policy” (Knox 1A). But while government officials argue whether or not any action is good or bad politics or policy, the striking reality is that millions of Americans across the country are facing foreclosures.
Owning a home is an integral part of the American dream. But this year alone COMMA thousands of homeowners across the country face foreclosures. It is inevitable to see the high rise of home mortgage foreclosures nationwide. A record number of homeowners are now defaulting on their loans and risk losing their homes. According to the Chicago Sun-Times ITALICIZE OR UNDERLINE. (2007)COMMA there were 6,339 foreclosures just in the City of Chicago as of Dec.SPELL OUT 2007 (Golab 7). Despite the huge number of foreclosures, however, Congress appears to be in no hurry to help. There’s nothing being done COMMA and the problem is not going away by itself.
TO INDICATE NEW PARAGRAPH, EITHER SKIP A LINE OR INDENT.
Much of the turmoil is due to the United States mortgage finance system. In particular, the adjustable rate mortgage loans. NOT A SENTENCE An adjustable rate mortgage loan (ARM) PUT ACRONYM BEFORE "LOAN." is a mortgage loan where the interest rate on the note is periodically adjusted based on financial index (Anken 26). According to Peter Abken (1991), author of DELETE "AUTHOR OF" this is done to ensure a steady margin for the lender, whose own costs of funding will usually be related to the index (Abken 26). Consequently, payments made by the borrower may change over time with the changing interest rates (Abken 26). This gave many borrowers a false sense of what was affordable, these adjustable rate mortgages loans were made available to people with low income and bad credit. As a result when mortgage payments skyrocketed, families could not afford to pay their mortgage, leaving tens of thousands of borrowers unable to keep up, therefore, on the verge of loosing their homes. IF ALL OR MOST OF THIS COMES FROM ONE SOURCE (ABKEN 26), ONLY NEED TO REFERENCE SOURCE AT THE END OF THE PARAGRAPH.
According to the Noell Knox (2007) form SP the USA TODAY, ITALICIZE OR UNDERLINE PERIODICAL TITLES RATHER THAN CAPITALIZE. nearly 16% of subprime borrowers are behind on their ARM LOANs. For instance, Ann Zimmerman (2007) from the The Wall Street Journal ITALICIZE OR UNDERLINE shares the story of Mr. and Mrs. Harriman, a New York couple who are trying to hold on to their 1,100 square-foot ranch HOME in Long Island (Zimmerman B1 2007). The unreasonable increase in payments, due to the WHICH RATE? rate increase COMMA has made it impossible for them to keep up with the payments. In the last month COMMA their monthly mortgage interest rate rose by two and a half points, that’s an increase of $800 dollars a month COMMA leading them to a potential foreclosure (Zimmerman B1). SAME SOURCE? ONLY MENTION ONCE.
In addition to adjustable mortgage loans, refinancing has also led many homeowners into debt, later resulting in default on mortgage payments. Many homeowners refinanced with a larger mortgage, one reflecting the property’s greater value, expecting the value to keep rising (Zimmerman B2). Borrowers would payoff the original smaller mortgage and pocket the rest, a process called “cash out refinancing” (Zimmerman B2). However with the decrease in home value has made it very difficult to cash out, especially those of low and middle income households. CITE REFERENCE AT END.
In an August issue from the USA TODAY,ITALICIZE OR UNDERLINE. Noell Knox (2007), reported that “some homeowners with dangerous subprime adjustable-rate mortgages will be able to refinance before they lose their home to foreclosure, with the help from President Bush” (Knox 1A). President Bush’s proposal suggests raising loan limits. Currently the maximum loan the FHA can guarantee is $202,000 in most states, and up $362,000 in high cost states such as California and New York (Knox 1A). Bush’s reforms will extend the loan limit to $262,000 in most states and $417,000 in pricier areas (Knox 1A). This proposal is expected to help and SP estimate of 80,000 homeowners with bruised credit and subprime ARM’s they can no longer afford (Knox 1A). However COMMA in order to qualify for the new benefit, homeowners would have to prove they paid their loan on time before it reset to a higher rate and must have at least 3% equity in the home (Knox 1A). President Bush also asserted that he will call on Congress to pass his proposal to reform the FHA and broadened the lending criteria (Knox 1A).
Despite President Bush’s effort COMMA his proposal has incited much criticism. Such as those of DELETE PREVIOUS PHRASE. Peter Wallison of the American Enterprise PERIODICAL TITLE? says, in retaliation to Bush’s intervention and proposal, “This will only cause the problem to rise again. If we are going to allow (lenders) to be refinanced out, what we’re doing is saving them from their own greed ….It might be good politics, but it’s very bad policy” (Knox 1A). But while government officials argue whether or not any action is good or bad politics or policy, the striking reality is that millions of Americans across the country are facing foreclosures.
INTERESTING PAPER AND INTERESTING PROBLEM.
YOUR PROBLEMS SEEM TO CENTER AROUND COMMAS, CITING PERIODICALS PROPERLY AND TOO MANY REFERENCES FOR ONE PARTICULAR SOURCE WITHIN A PARAGRAPH.
I HOPE THIS HELPS. THANKS FOR ASKING.