The foreclosure crisis is the result of too many unqualified people getting loans, the result being that more money has been loaned than was which will be reimbursed. This was due to the lifting of restrictions on the mortgage sector in order to encourage social engineering. We need to return to sound lending practices like those we had in the past (and as they are practiced in Canada). One of the biggest contributing factors to the housing crisis was income-stated loans. A “stated income loan” is a loan made to an individual whose income is not documented but claimed verbally. This loan system is poorly designed and should be the first thing removed. However, the damage of this system has already been done. Much of this reform is already underway. But this will not be enough to resolve the current crisis in the real estate market and the mortgage sector. Every family involved in this case is different and every circumstance is unique. However, we can divide the victims into the most affected groups. There are four general groups that encompass the mass of affected people. 1) There are builders who have empty homes and condos and whose construction loans are coming due. 2) There are homeowners who find themselves stuck in a loan without the possibility of refinancing, due to the decline in the value of their home. 3) There are people who have found that the value of their home has dropped so much that they have no incentive to stay. And 4) There are people who simply cannot afford their current home; this may be because they lost their job or weren't honest about their income from the start. These groups encompass the majority of victims and each must be treated separately to ease the burden...... middle of paper ... immediate solution, but they place a burden on the housing market. Some borrowers will need to be seized. However, efforts should be made to encourage them to take advantage of the above programs. Our hope is to minimize the current damage and allow the real estate market and the mortgage sector to one day emerge from the crisis. We do this by limiting the burden on other groups long enough for the housing market and mortgage industry to recover. There is no single solution to improving this housing crisis, and no matter what method is applied, it will take time. It's important when we're trying to solve this problem to keep in mind that these are people and we're talking about their homes. The housing crisis we face today is the product of bad policies and a lack of foresight. It would be a mistake to try to solve our problem with the same mindset..