Rise In Foreclosures Leads To Fall In Property
Foreclosures are causing loss not only to the individual but also to the nation at large. It is estimated that more the $1000 billion of real estate will be affected and government coffers will find itself less by $917 million in taxes by 2009. These findings are based on a recent congressional finding.
The Joint Economic Committee calculates that these losses will be the direct outcome of 2 million house owners entering foreclosures zone by the end of the forthcoming year. Senator Charles Schumer (D-NY) who has come forward with some remedial suggestions leads the committee that he has been trying to enforce for some time.
The study reports that in New York State $9.4 billion of property value will just vanish and property taxes will be less by $102 million. The worst affected are those on Long Island. Thus it is clear that the foreclosure crisis covers far more than the borrower-lender zone. It embraces in its tentacles the socio-economic structure of the entire nation. Right now all that can be done is to see that further financial strain is not put on Nassau and Suffolk region from where the highest property taxes are collected.
Those not in the foreclosure dragnet will see their property values plummet down because of the general picture. They will collectively preside over the loss of $32 billion in housing value across the nation and $4.3 billion in the state.
Schumer is focusing on prevention of future foreclosure and simultaneously to help those already in its clutches he is appealing to lenders to modify loan terms. The Federal Housing Administration is being given more teeth by way of funds to step in with refinancing help and amending bankruptcy rules to allow judges greater freedom about loan modification.
The Mortgage Bankers Association however disagrees with the report, which stands on the premise that house values will go down by 20% and that another 2 million will be facing foreclosure. It will in reality hover around 1.1 million to 1.2 million. The value of housing will not be uniform but will concentrate in certain pockets. An area where there are many foreclosures will naturally see a reduction in real estate prices in general.
Another economist criticizes the report for not taking into account the economic downfall of the individual and its impact on families.
