The real estate market in the U.S. has visibly taken a downward plunge in the last couple of years. This was caused primarily due to the expansion-of-credit phase that stimulated illogical excitement. Here’s how it all happened.

After the 9/11 attacks the U.S. government wanted to lure more foreign investment and in order to prove that America still was a safe haven for investments, they cut interest rates. What happened next wasn’t very surprising. Foreign investment soon began to pour in because of low interest rates and the US market was flooded with foreign capital. This led to the weakening of the US dollar, oil prices which were being used as an alternative for the exchange rate, shot up sky high and the real estate market started showing signs of weakness.

Due to the overflow of cash many people who didn’t have the money bought houses. This soon led to home owners defaulting on their mortgage payments and creating the Real Estate Crisis that we today find ourselves in.

President Barack Obama has an ambitious plan to change this situation. He is planning on using $ 75 billion to rework the current troubled loans. The reason this plan’s describedas ambitious is because a recent bank statement mentions that 53% of loans that were modified, relapsed in the next six months.

President Obama’s plan is to assist homeowners to avoid a foreclosure. The process in place will simplify the selling of a home that is at present valued less than the mortgage. The program is called Making Homes Affordable and many borrowers have already managed to secure their homes due to this government aid.