Indirect Steps Taken by White House May Stem Foreclosures
From the time of Bush, the government has been taking many measures in tandem with the private sector to contain foreclosures. But so far this has no impact either on foreclosures or on the economy. But perhaps indirect steps taken by White House may stem the flow of foreclosures. This refers to creation of jobs through public funding and engaging in welfare projects that will ease the financial burden on the ordinary American.
The government asserted that it is optimistic about either creating or saving 3.5 million jobs by the close of 2010. Recently Vice President Biden claimed that about 150,000 jobs have been made or saved.
Jim Carr of National Community Reinvestment Coalition (chief operating officer) said, “The most significant foreclosure mitigation would be through new jobs” It is generally agreed that unemployment is aggravating the foreclosure problem. Danilo Pelletiere, of National Low Income Housing Coalition (research director) said, “Absolutely, unemployment is affecting the foreclosure rate and will drive it higher.”
As yet HUD is not sure about the number of jobs its contribution from the stimulus package will create. Anything will be welcome. Carr as well as Pellietiere made gloomy predictions about the forthcoming months and this is echoed by RealtyTrac – there will be increase in foreclosures.
The Making Home Affordable programme is making many hopeful. Shaun Donovan of HUD and Timothy Geithner of the Treasury said that the new incentives under the aforesaid plan will help stem foreclosures while at the same time giving protection to the lenders. It is hoped that 55,000 will benefit from it. But the number is too modest consisting the gargantuan size of the problem. In April this year there were 34,038 foreclosure postings.
The foreclosure problem is no longer about sub-prime mortgages. Even those with prime mortgages and good credit history are stumbling in making monthly payments. The problem is about jobs. Only then does the question of reduction of mortgage payments make any sense.
The cornered borrowers desperate to stay in their homes will look for any scrap of help they can get. The best thing is to get the people back to work so that they can afford to run their mortgages. Without work, even if mortgage amounts are reduced, the ordinary American will not be able to pay anything. Obama is hopeful that his focus on job creation will cut the Gordian knot of the problem.
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