The nationwide foreclosures have literally shoved the American people into a debt abyss. Irrespective of the reasons and circumstances, the financial crunch that has gripped the country has not spared the native or the immigrant, young or old, poor or the affluent. America\’s money lenders and brokers have acted the Pied Piper in leading millions of American public into the debt trap, who identify themselves with the miners of old, steeped in debt to the store and unable to repay. Each passing day witnesses several additions to the number.
Harrowing tales of distressed borrowers are splashed across the nation through the media and to the world. Diane McLeod was a valuable customer to her lenders. She was able to secure two mortgages at a time, with varying interest rates. With the fluctuating housing market trends and interest rates mounting to spark off the high rates of foreclosure, Ms McLeod began to stagger. She had a car loan to repay and a high cost credit card. Like any other American she was used to high living and spend more than she earned. She lived with her 20-year-old son in a small two bed-roomed ranch house in suburban Philadelphia and drove her car to work. She was separated from her husband and handled two jobs to fulfill her dreams, which she was doing until rates began to soar and medical emergencies left her drained. She defaulted on her mortgage payments and her credit card bills mounted. She was terminated from her job and left to ruin with her house in foreclosure and her reputation at stake. She was bombarded with calls from the house mortgage agencies, almost 20 times a day, trying to slap a foreclosure notice which she in utter frustration, refused to respond to.
Ms.McLeod represents the average American today. However her lifestyle was not totally to blame. The financial giants Citigroup, Capital One and GE Capital had begun to collect interest payments that accounted for more than 40% of her total income, adding thousands more to it as fees. These financial companies with their non-transparent loan policies that land borrowers in knee-deep trouble when things go awry, are also to blame.
In recent years, the practices that had boosted the American economy and acquired record profits for many banks for decades, have floundered and jolted the nation’s economic system in its entirety, spiraling defaults, losses and foreclosures, crippling the nation.
The picture across the country is grim – in June foreclosure numbers were more than double (53%) while the bank repossession numbers tripled from what it was a year before. Bank seizures badly mauled the real estate market eroding the value of all the houses waiting on the shop shelves to be sold. Higher interest rates forced many to succumb to foreclosures.
One in 501 houses in USA calculating to 252,000 houses slipped into the foreclosure net. RealtyTrac notes that bank seizure rose by 171% since this California based company started tracing operations in January 2005. Mark Zandy of Moody’s Economy said that the job market is shrinking and the equity of the properties of house owner’s is dwindling. Lenders are unwilling to talk when the worth of the house falls below the amount of the loan. It is a no go situation for the foreclosure victims.
Since the Depression of the 1930’s foreclosure situation is at its worst commented Rick Sharga of RealtyTrac. In April there was a record fall in the real estate market and this is pushing more people into foreclosures. More foreclosures mean more fall in prices – a vicious cycle. Sharga fears that before the year draws to an end there will more than a million foreclosed houses representing about one fourth or one third of all the houses waiting to be sold in the country. More than half of those with sub-prime loans will have a negative equity on their houses by the end of this year. This will increase to 63% in 2009 said Rod Dubitsky of Credit Suisse.
The foreclosure crisis has made mortgage rules stricter and this is preventing those with floating loans to refinance. Credit Suisse predicts that by the close of 2012, 2.7 million sub-prime mortgage loan holders will be foreclosed upon by the lenders. It is expected to peak by the third quarter of this year – 2008. Since the spring of 2006 equity on houses have been wiped out to the tune of $3.5 trillion.
All combined there is glut in the real estate market of unsold properties. The Congress is trying to insure as much as $300 billion to refinance mortgage and save about 2 million borrowers from foreclosure. But the real long-term way in which the process can be reversed is if the housing market starts to turn around. All other measures will only prolong the inevitable. It is almost sure that house prices will decline by another 5% or 10%.
The foreclosure crisis worsens but the victims are fighting it and struggling to continue to stay in the houses that are their homes. The Government together with the mortgage industry is going all out to address the problem that has gone beyond the boundaries of the playing fields of the lenders and borrowers. All are [...]
The foreclosure mess mires as $25 billion might be required to save Freddie Mac and Fannie Mae. The Congress is putting its best foot forward to stabilize these two mortgage giants. The federal rescue efforts will ultimately come out of the pockets of the taxpayers. The lawmakers argue that by saving them, the foreclosure victims [...]
The present foreclosure crisis is reminding Texans of the bank collapse of the eighties. Sure investments have again vanished into thin air. Banks having overfed on forceful lending is now tottering on the brink. Only Time alone can give the true picture of the present day economy of USA.
It is apprehended by experts that [...]
The foreclosure rescue bill is poised to take off. By it both borrowers facing foreclosures and banks riddled with foreclosure related losses would benefit. Both the parties are supporting the bill for the general welfare. If all goes well than the bill will sail through the Senate on Friday 25th July. There are bumps ahead [...]
Sub-primes are no longer the main reasons for foreclosures. Today the main culprit is the rapid decline in real estate prices.
The foreclosure epidemic of North County is rapidly spreading not because of sub-prime so much as because of many other factors that have led to a fall in the real estate market.
Oceanside and east [...]
The Federal Bank of Boston and The New England Patriots Charitable Foundation will be hosting a foreclosure prevention workshop at Gillette Stadium. No fees will be charged. It will be held on Tuesday 12th August. Starting from 1 pm it will continue till 8 pm. The workshop will be a great opportunity for foreclosure victims [...]
