Budgeting Only Way Out From Foreclosure Battering

May 8th, 2008

Frederick County is resorting to budgeting to be the only way out from the foreclosure battering the local economy is taking. Commissioner John L. Thompson feels that the county will rise to the occasion and stem the tide. Thompson strongly feels that it is the decision of the Federal Reserve to bail out those who had been responsible for this sub-prime fiasco that are to blame. He said in no uncertain words, ‘The Federal Reserve is, in effect, swapping the bad loans for treasury securities.’ He considered the move to be similar to printing money at lib without a thought for the implications. By this move those borrowers who had been frugal and regular in meeting commitments are being punished. Their savings are being debased. On the other hand those who bought houses they could ill afford will find themselves rewarded for their dubitable actions. It seems, he said, that the country is moving away from the free enterprise economy to a system where politics dictates. Profits during the good years are privatized while in the lean period there are socialized bailouts.

A report released by National Association of Counties says that Montgomery County fears that there will be a shortfall of $297 million because of the foreclosure crisis. Thus all the counties are not so optimistic about budget as Frederick.

As soon as a borrower falls behind in payments, foreclosure notices are sent to the borrowers as well as to the treasury office of the county. The auction sale details are notified. Currently there are 50 to 100 sales per week. Each week there has been an increase of 25 sales in comparison to the modest 25 per month previously.

Lori Decker is the director of the treasury in Frederick County. He comments that it is this foreclosure activity that is preventing the tax kitty from becoming empty. Previously one realtor would record 25 to 30 deeds in a week. Today they hardly bring 2 to 6. When a bank repossesses tax is paid to the local authorities. It is the same when the property is transferred to a third party. The exception is when the buyer is a government body like Fannie Mae or Freddie Mac. The property taxes have to be paid before conducting transfers. In this way the country raises funds. Thus Decker feels that foreclosure houses should not have a negative effect on the revenue connected from property taxes.