Foreclosures Likely To Rise

Treasury Undersecretary Robert Steel is apprehensive that in the forthcoming year the foreclosure rates will continue to rise to record levels. According to records 1.8 million rates of sub-prime mortgages will increase during the coming two years. However all are not destined to end in foreclosure. Steel was testifying before the Senate Committee on Banking, Housing and Urban Affairs. He said that Hope Now Alliance (set up in October 2007) would help 1.2 million of these 1.8 million.

Steel further noted that from data coming in for the third quarter of 2007 the foreclosure started with 2.7%. The average percentage point is much higher than 1% point during 2001 and 2005. It means an extra number of 650,000 additional mortgages starts each year.
The chairperson of the committee, Christopher Dodd commented that the body had been discussing the problem of foreclosures for about a year but yet no positive step has been seen to soften the crisis. Earlier Dodd had proposed the setting up of a federal corporation that would buy the loans that were at risk of default and help the owners to refinance. But during the hearing of the committee he stressed his confidence that the market would resolve the crisis on its own steam. He admitted there was no silver bullet to eradicated and erase the problem.

When questioned about avoiding approaches Dodd replied that he was open to suggestions.
The Committee did not commit itself any specific approach to the foreclosure crisis although many were vociferous about their disappointment with the watery impact of Hope Now Alliance.
When the sub-prime loans were pushed ahead with much fanfare nobody thought of the grave consequences. Today the crisis has reached gigantic proportions with no part of the socio-economic scene of the entire country left untouched. Politicians of all shades are laying the blame at the door of predatory lending but nobody had tweaked when the game was one and real estate prices were booming. Everybody is making a lot of noise but little action is tangible. Many theories are advanced – the market cannot be interfered with. It will set a bad precedent. Now that lenders are also in the soup facing a cash crunch with no inflow of cash from mortgages everybody is looking around for a solution. Tax kitties are drying up. The people are disgruntled and this relates to vote banks – a very thorny issue.