Housing Crisis Still on the Rampage with More Forecloser Homes
February 6th, 2010 | by admin |The number of forecloser homes increased by more than five percent during the third quarter of 2009 when compared to the previous quarter. The increase occurred despite the presence of the Making Home Affordable program of the federal government that attempts to help borrowers undergoing financial hardships to get a loan modification to reduce their monthly payments. It appears that the government program has been overwhelmed by the large number of layoffs.
There were almost 938,000 forecloser homes during the period of July to September 2009, which is approximately 48,000 homes more than the preceding quarter. At this rate, the number of foreclosure filings is expected to reach approximately 3.5 million for the whole year of 2009, which is much higher than the 2.3 million filings in 2008.
The primary reason for the rise in the forecloser rate, in the spite of many economists claiming that the recession is over, has been the unemployment rate, which has attained a record level of 9.8 percent for last the 26 years. Moreover, experts have predicted that the unemployment rate will keep on rising until it will attain its highest level in the middle of 2010. Mortgage lenders are trying to help by permitting the homeowners to be delayed by three to six months in their payments as they look for work. However, with the record unemployment rate, it is very difficult for those who have lost their jobs to find work.
The Administration of President Obama had recently reported that its initiative has attained an important milestone when more than 500,000 loan modifications have been granted. However, the rise in the number of people defaulting on their loans has been much faster than the increase in the number of people getting loan modifications.
Somehow, mortgage companies have been trying to reduce the impact of the housing crisis by slowing down the rate of foreclosures. They have been trying to examine whether the borrowers would be able to fulfill the requirements for the Making Home Affordable program of the Obama Administration. However, analysts believe that a large number of these homeowners would not be eligible and they predict that more forecloser homes will become available in 2010. This is expected to pull down home market values further. It has been observed that the financial problems being experienced by some of the borrowers are so massive that banks and lenders are finding it impossible to structure a loan modification plan that would fit their current income capacity.
