Foreclosure Situation is Not Getting any Better

Although the housing market is showing signs of recovery, other indicators show the foreclosure crisis is getting worse. In a September interview with U.S. News, Austan Goolsbee, the former chairman of the Council of Economic Advisers, said, “I think there’s a lot wrong in the housing market. If Fannie and Freddie would start enabling people to rent out the vacant homes, that would also help.”

Some interesting foreclosure facts:

1. The mortgage loans which are currently under the foreclosure process, is amounting to almost $45 billion (that is mainly in terms with negative equity)

2. Almost close to 140,000 numbers of homeowners has received at least one or the other type of mortgage debt relief, with respect to the mortgage settlement program, averaging to around $76,615 amount every person.–More than almost 12 million homeowners are currently considered to be underwater, who are still making payments

3. There are more than 1.5 million of the homeowners, who are at least 50 years or even older and may have lost the home to foreclosure, since the year 2007, when the mortgage crisis actually began

4. The government has monitored the settlement program, and has reported that the 5 most significant banks has provided around $10.6 billion in total, as the aid money starting from only from March 1 through that of June 30.

5. Since the year 2010, almost 270 churches have gotten sold off, after they have defaulted on the mortgage loan payments, and the 90 percent of the home sales resulted after foreclosure chain which was triggered off by the lenders

President Barack Obama is planning to bring on a mortgage refinancing plan, which may help alleviate the foreclosure crisis. It’s aimed mainly the working and the middle class to equip them with better mortgage management. Obama has said that, though the housing market has been recovering, it is going “to take a while for our housing market to fully recover.” He has also claimed that the refinance plan, which he is urging Congress to pass, would help responsible homeowners to save at least around $3,000 per year simply through refinancing their homes at low interest rates. This in return may help with the recovery of the economic situation of the nation. It can also potentially help improve the job market. Yet market watchers aren’t feeling confident the plan will get passed by Congress.

The issue derives from the fact that the foreclosure problem has ballooned to the point that even home-mortgage modification programs are proving to be falling short. The Federal Housing Finance Agency, under the supervision of mortgage giants Fannie Mae and Freddie Mac, introduced a pilot program at the beginning of this year aimed at helping the foreclosed homes, but it appears to lack efficacy.

The mortgage foreclosure crisis is weighing heavily not only on the minds of homeowners who may have just started a family but on the minds of people thinking about retirement. As home values depreciate, financial assets are folks nearing retirement take a hit.

Additionally, multiple factors are exacerbating the problems for homeowners, one of the largest of which is the home equity issue. After the housing crisis and the recession, home equities dipped even more, pushing a large number of homeowners toward the edge of foreclosure. This is contributing to worsening issues with regards to the real estate market. In general, the value of a home risse with the passage of time, which serves as the biggest form of savings for homeowners. When it doesn’t happen, the people planning to secure their retirement may lose confidence in retiring happily.

Another problem is affordability. Brandon Moore, CEO of RealtyTrac, said in a July interview with U.S. News that “40 million Americans choose to pay a mortgage every month and even if just a small fraction of those choose not to do so, things can compound and get much worse pretty quickly.” So even if the financial situations of some people have improved, it may not prove to be helpful enough for the housing market as a whole.

More than 12 million Americans are stuck with underwater mortgages. Although the majority of these people are still making their minimum monthly payments, there are strong chances that these homeowners are going to run into serious trouble.

Ray Garcia, Esq.
Board Certified in Real Estate Law
by the Florida Bar

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