San Francisco Foreclosures Deeply Concerning Federal Reserve
The surging foreclosures have deeply concerned the Federal Reserve Bank. Its San Francisco president, Janet Yellen has taken grave note of the impact on the foreclosures on families and localities. She was speaking at a conference in Los Angeles regarding community stabilization problems following the foreclosure crisis.
She said the swift pace of rising foreclosures has had a snowballing effect on not just the immediate locality but on the general economy of America.
She continued that the country is facing severe challenges from foreclosures accompanied by credit crunch and record breaking fuel and food prices. It is imperative that at this juncture the policy makers will have to carefully monitor the course of events. Timely intervention will have to be made to bring down inflation levels allowing for employment and financial growth. Yellen clarified that the Federal Reserve considered the sky rocketing foreclosures as an “urgent problem”. The call of the hour was to prevent foreclosures in both public and private sectors.
Yellen concentrated on the effects of foreclosure in her district – the 12th for the Federal Reserve. She acknowledged that although many regions are battling foreclosures, it is particularly bad and intense in Arizona, California and Nevada. It has been “sudden and substantial.” Foreclosures are devastating not only for the borrowers but are also badly mauling the surrounding neighbourhood.
The plight of the borrowers can hardly be fully expressed in words. It is not just about the loss of the houses that are homes, but impairment of equity, bad credit ratings that limit the future accessibility of getting loans and starting life anew in a new house.
The communities of the foreclosure regions are trapped in a “self-reinforcing cycle of decline”. Increasing foreclosures crowd into the market putting a strain on the local housing market that in turn leads to rise in further foreclosures from defaults.
Especially hurt are the families with low and middle income. Foreclosures are putting a stop to all endeavours to revitalize and upgrade neighbourhoods. This means that the results of foreclosures are going far beyond the housing sector. She added that meeting this challenge would require more vigorous and direct intervention both in the local as well as the federal level.
While all the talk and hype goes on, foreclosures continue to gallop ahead gleefully cutting into all sections of the socio-economic divide and sparing none.
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