Foreclosure Strategy To resolve the foreclosure crisis we must take a multi-pronged approach that addresses the issues that make the situation worse and that caused the problems in the first place. Our goal is to do this in an efficient and time-conscious manner. Any solution will have its positive and negative aspects, but we must try to maximize the former and minimize the latter. The biggest problem is that we have had and have overinvestment in real estate which has led to overproduction in real estate. In other words, we have too much supply. This massive oversupply has led to declining home prices. To remedy this we must increase demand or decrease supply. While I will discuss ideas for achieving both a reduction in supply and an increase in demand, I believe that stimulating the demand side will be more productive. However, if we expand homebuyers at the expense of rental owners, we will still cause significant harm. Also, keep in mind that the US population is growing at about 1% per year and, if left to natural mechanisms, it will take years to absorb the excess supply. First, let's try to solve the problems that are making the situation worse. We'll quickly touch on oversupply issues and then move on to demand solutions. One reason for the oversupply of housing is that many individuals who can afford their own homes leave due to negative home values. Negative equity in the home means that the remaining mortgage debt is greater than the current price of the home. Statistically, most people who forgo mortgage payments have negative equity. They made the financial decision to buy a house at a certain price, but because the current price is lower they now don't... mid-paper... after 3 years 20% of the original equity allocation can be sold, and then in the fifth year 30% can be sold. At any time during this period, if bonuses are deemed to have been awarded incorrectly due to poor performance, the remainder may be recovered. This gives an incentive to do what is best in the long term and should eliminate many of the poor short-term decisions. This document was written to provide a general outline of some measures that can be taken to decrease the supply of housing, increase the demand for housing, and solve some of the problems that created the housing bubble. It is not exhaustive as there are more things you can do, but I have tried to include some of the most relevant. This multi-strategic approach not only helps solve the housing crisis, but is also instrumental for economic growth and provides positive long-term incentives.