Amidst foreclosures, Obama Administration Claims to have Rectifie
The economy of United States is going through a hard phase. The people have been losing their jobs therefore they are unable to make the mortgage payments resulting in a high foreclosure rate. The Federal government had come up with Making Homes Affordable program will be give the option of revising mortgage. First, these borrowers will be placed on trial and then after they have successfully made the revised mortgage payments, their loans will be revised permanently.
Initially, the process of loan modification had been slow what with banks caught up in procedural delays. But now the Obama administration claims that it has been able to modify the loans of 500,000 people and place them on a trial basis. However, experts feel that the move is only delaying foreclosures. It will not have any significant impact on the housing crisis.
According to RealtyTrac, 937,840 homes fell into foreclosure, which meant a 23 per cent hike from the previous year’s. There are still many distressed properties. Experts have noted that the foreclosure wave came in three phases. In the first phase, the speculators withdrew from the market sending the market into turmoil. In the second, more critical phase, those with sub-prime mortgages went bust. However, in the last and final phase, even people with good credit histories are not being able to make mortgage payments because of unemployment. Unless, this problem is solved, the tide of foreclosures will not stop.
This current trend shows that more employment is to be created. Unless the problem in the labor market is addressed, there is no way that the housing crisis can be redressed. Hence, the need of the hour is to create more jobs. Till such time happens, the foreclosure crisis will continue to haunt the real estate market. The unemployment level has to reach a peak and decline before the foreclosure crisis abates. As of now, the unemployment level is pegged at 10.2 per cent.