Foreclosures Are Centred in Four States

February 9th, 2009

Since foreclosures are centred in four states many are posing the obvious question – why should the others bear the burden for these few? The taxpayers across the country will have to share the pain of the bailout package.

More than half the foreclosure numbers were listed in Arizona, California, Florida and Nevada in 2008 according to RealtyTrac. This is despite the fact that the states hold only about quarter of all the mortgages in the country. Skyrocketing foreclosures in these states have magnified the national figures.

The lawmakers are geared up to spend nearly $100 billion from the bailout funds on a foreclosure prevention plan that will be sweeping in nature. Barack Obama has pushed it into force. But economists, politicians and analysts are confused by this dichotomy of the few holding the nation at ransom, as it were.

RealtyTrack reported that 2.3 million American house owners faced foreclosure in 2008 – it being 81% higher than the previous year.

Jan Hatzius of Golman Sachs that the huge number of unsold houses are constantly pushing down prices with no sign of letting up. It was predicted that prices would fall by another 20% to 25% till the middle of 2010.

The Sunbelt states that had attracted people from colder climes, with its sun and jobs have also become centres of soured loans. It has been home to some of the questionable lenders like IndyMac, Countrywide Financial etc. Many of these have been shamed and humbled if not completely liquidated.

Politicians in many areas in New Jersey are facing the flak from borrowers who have been and are current in their mortgages. They see no reason to shoulder the burden of mistakes made by others in distant places. Those who have been irresponsible should pay for it.

Rep. Scott Garett (Republican) has been receiving numerous messages from voters who are complaining along similar lines. Senator David Vitter (Republican) had tried in vain to block the sanctioning of the second half of the bailout package. He admits that addressing the foreclosure problem is key to the solution of the economic slump but bad decisions should not be encouraged. Those who were diligent and thrifty should not now be punished. It will give out the wrong messages, which will do great harm.

There are other pockets of foreclosure concentration in Minneapolis, Detroit and Cleveland as well as the suburbs of Washington D.C.