Foreclosures Snatch Houses From Millions of Americans

August 11th, 2008

Foreclosures are snatching houses from millions of Americans who are losing their homes as they fell prey to the foreclosure menace that has taken grip over the country for the past two years. Statistically, one million have already been rendered homeless, another one million, three months past due on their payments were to receive a foreclosure filing, and two million just 30days past due, waiting in the wings for the inevitable to happen, totaling a gruesome three million without a home in the months ahead facing foreclosure or under the threat of foreclosure. There was a dire need to reformulate lending policies to borrowers interested in buying a house or else a wave of foreclosures estimated at five million house owners would lose their homes within the next few years.

It seemed that the foreclosure devil was walking the land. Undoubtedly, the Americans were experiencing the worst-ever housing crisis since the Great Depression, where millions were abandoning their homes due to foreclosure and the numbers were likely to grow if no step was taken to halt the foreclosure march. The rising foreclosure rate, stunting housing prices and eroding the quality of life of the people adversely affected the surrounding neighborhood.

The lending pattern was a pre-conceived net whereby prospective borrowers were lured by unscrupulous mortgage companies into accepting adjustable-rate mortgage loans that reset itself after the introductory offer period was over. The borrowers mainly belonged to the low-income or middle-income group who were unable to reset their earnings with the increase in interest rate and defaulted on their payments.

The scenario was definitely agonizing for families who have no other option but face foreclosure filings. It was optimistic to think that if prices of houses began to rise then there was a possibility that borrowers would avail of a refinance on their mortgage to get a new ‘teaser’ rate and heave a sigh of relief for another year or two.

Despairingly, the prices of houses were on a downhill trend, blocking the way of refinance and conversely, for house owners, to make payments at unaffordable high rates of interest. Already in harness with the foreclosure issue the house owners had to deal with another offshoot of foreclosure -the negative equity, which meant that the market value of their property was less than the value of their mortgage. Adding worries to woes were the inflation and unemployment problems that held the foreclosure crisis in a vicious circle.