One Eighth of Homeowners in America are in or about to Enter Foreclosure
Approximately one in eight of homeowners in America are either in foreclosure or about to enter it. Increase in job losses is worsening the situation that started off with the sub-prime fiasco triggered by lax lending standards. These figures were released recently by Mortgage Bankers Association.
Unemployment has touched the highest figures since the last sixteen years or more. It is apprehended that this trend will continue till the middle or late 2010. More borrowers will be paying late or drop into foreclosure this current year said the chief economist of the group.
Jay Brinkman of the association said, “While California, Florida, Nevada, Arizona and Michigan continue to dominate the delinquency numbers, some of the sharpest increases we saw last quarter in loans 90 days or more delinquent were in Louisiana, New York, Georgia, Texas and Mississippi, signs of the spreading impact of the recession.”
The entire picture has changed. Hitherto it used to be low-income group that faced foreclosure. But that is no longer the case. Unemployment has cut across all dividing lines. Even those with prime mortgages are having difficulty in keeping up with payments. Fixed rate loans represents two thirds of the mortgages held by Americans.
The $275 billion housing stimulus measure of President Barack Obama will streamline the modification operations and make the path easy for refinancing. This will iron out the differences caused by various states imposing different moratoriums on foreclosure proceedings. These steps however had a big hand in reducing the number of foreclosures during the fourth quarter of 2008.
Brinkman cautioned and said, “But keep in mind that there are three drivers to the housing problem, and this program of course addresses mostly the first one.” The two others are oversupply of houses because of a pile up of unsold foreclosed units and joblessness. These two are heavy dark clouds hanging over the economy.
Nicholas Bratsofolis of LendAmerica based in Melville, New York said, that it cannot be accepted in a country like USA that one out of eight house owners is in foreclosure or late in making mortgage payments. He said, “Instead of wringing our hands, I think we should start utilizing the tools that the government has given to us to remedy the ills that are facing many of these homeowners.”
Nearly 11.18% of the loans were at least lagging behind in mortgage payment if not already in foreclosure in 2008.
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