Foreclosures have become very common thanks to joblessness
July 27th, 2009
The situation is indeed grim. As the recession takes a grip on the economy, unemployment rises to a new high. With joblessness mounting, people are unable to make their mortgage payments, as a result of which foreclosures have become very common. Now the Obama administration is planning to come up with new means to delay foreclosure filings of those who have lost jobs.
There may be new policies that will allow borrowers to delay mortgage payments. They may even skip payments if need be. The government officials feel that such policies will be more effective than those that are in place now.
Over the years, the number of defaulters has steadily risen. These people had opted for loans that were easily available. But once the economy went through a tailspin and companies closed down, these homeowners just did not know how to make the loan payments. As people faltered on mortgage payments and foreclosures increased, property values plunged to an all-time low. The market is choc-a-bloc with unsold, foreclosed homes.
However, officials feel that it will be difficult to implement policies since they carry certain hazards. True, it can help people who are saddled with debts but such incentives can distort the reality as well. The program has to be in tune with other actions that are being taken to help the jobless.
Already the officials are frustrated with the bureaucratic bungles associated with the home rescue plan. It was meant for refinancing 5 million borrowers and reducing the monthly payments of 4 million more people.
The housing crisis began after a period of five-year boom propelled by easy lending norms. Analysts, however, point out that the current housing crisis is because of rising unemployment. Jay Brinkmann, chief economist for the Mortgage Bankers Association, says the numbers keep growing. The housing crisis is nowhere near the end.
Normally, homeowners default after a crisis but the present situation has been prompted by an economic downturn. The government has therefore come up with mortgage modification program to help the distressed owners. But even then the situation has not changed much. What’s worse, the economic scenario has encouraged crime hitherto unheard of. Unscrupulous agencies have approached homeowners with suggestions of loan modification in return for upfront payment.
The Federal Government is now conducting awareness campaigns about such frauds. Criminals are also being brought to book. However, such criminal activity is yet to be uprooted.
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August 7th, 2009 at 7:10 am
[...] Foreclosures are posing a challenge to homeowner’s associations in Tallahassee as they are crossing swords with the banks. For a long time there has been animosity between the management of properties known as association directors and the individual owners of the units Today with the entry of foreclosures on to the stage the banks have entered the combat zone. [...]