Foreclosures Crisis Management

Posted on February 16th, 2009 by saman

An important principle of the risk control crisis – is the facts’ disclosure- you have to communicate exactly what it has happened, which the causes were and what measurers you will take, even if the legal foreclosures consultants will advise you to remain silent. It is still a principle, which was not abided by the American financial institutions.

One side of the problem is that the Govern and the Treasury’s secretary do not reveal the whole reality; they do not justify causes and measures that they will take. It can be taken as a lack of interest for citizens. On the other hand, people are frustrated because of all the details they do not understand, and which are not provided to them.

Another principle that can solve the foreclosure crisis is the symmetrical communication principle. Within an organization, communication must be two-dimensional both from the management toward the employees and external audiences but also vice-versa. The Govern and the financial giants affected by the crisis should discover not only the specialists’ feedback in finances but also the one of the common people.

You should listen to all the people when the crisis becomes complex. If research is done, interviews can be taken and focus groups can be done with common people in towns, to make them tell you what they have not understood, what they would like to know, what questions they have.

Another principle is the principle of relation. It is necessary to have an already build relation with the public which may be affected by the foreclosures crisis, before it breaks up. There is strong relation, which is built in time. The problem of the current foreclosures crisis is that the investment banks were not used to establishing connections with the common public, focusing only on the relations with big companies.

Even if until now these principles were rather ignored, the American financial institutions would begin from now on to follow them. It is one of the biggest crises in history. In a crisis like that, it is hard not to have consideration for these principles, because mass media keeps an eye on the organizations. If you do not speak, they will still get the information from other reliable sources, which could be worse for the organization.

Specialists’ experience for many years makes them believe that they will gradually get rid of the position of information spreader and they will focuses on the strategic guidance. The 2008 the financial crisis and the increasing of foreclosures for sale sped up this process.

To continue with, the frequent name of the “sub prim” credits crisis is inadequate and confusion boosting, focusing the attention on the banking system.

In fact, the banking system, credits, were only a growing support for the real estate market and the credits, which faced repayment, were credits mortgaged on real estate. The foreclosures crisis was a direct consequence of mortgaged credit, not at all of consumer financed credit. The reason for this situation is the false premise at the beginning from the assumption that the economy will always increase in rhythm, which is at least constantly.