Foreclosure Freeze Did Not Help Matters
July 21st, 2009
The US economy is in a tailspin what with people losing jobs and recession taking its grip. As people are unable to make mortgage payments on homes, foreclosures rise. In fact, foreclosures have become a common feature of the US housing market.
For some time, the government had put a ban on foreclosures but that did not help matters in any way. In fact, it has made things worse for troubled homeowners. Now with the freeze being lifted, there’s a deluge of foreclosed properties that have flooded the market. This is pulling down the prices of homes and although it spells good news for first time investors but in general the real estate market has touched a record low.
President Obama had come up with Making Homes Affordable program but this has not helped matters much. Surveillance specialist Clayton Holdings is of the opinion that the temporary freeze on foreclosures did not improve the outlook of the housing industry. During the ban, the sales that could have been completed were not. Ultimately, 93 per cent of the houses were in foreclosure till April.
The data compiled by Clayton Holdings shows that only 7 per cent of homeowners were benefited by this. They were either given the opportunity of repayment or modifications. This is in contrary to reports that appeared in the press that a ban on foreclosures was necessary to help homeowners.
A persistent problem plaguing homeowners is negative equity. Homeowners find themselves in a precarious situation as home values drop to unimaginable levels. Not only this, residents are over-leveraged be it in homes or automobiles. Freezing foreclosures did not solve this problem of negative equity. The debt continued to pile up on consumers and the loan amount has now assumed proportions that consumers may find it difficult to pay.
Another executive says that his shop provides creative solutions to homeowners. He says many of these residents had taken 100 per cent loan on say a home that is priced at $500,000. Now the value of the home has crashed to $375,000 so even if the homeowner wants to sell it he will not be able to realize the equity. Another trend that is troubling people is that homeowners are not considering repayment options. Most of them believe that they are entitled to larger reductions in payment, which is actually not true. Consumers have not been properly informed about this.
- Spurt in Sales of Foreclosed Properties
- Foreclosure Climate Changes Spirit of Competition to Cooperation Among Contractors
- Bouncing Cheques Issued by Title Companies Lead to Foreclosures
- Increase in Foreclosures Prompting Class Action Legal Suits
- Avoiding Foreclosures by Walking Away From Loans are not Without Problems
- Foreclosure Assistance Being Taken on Tour by Housing Advocate
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