The number of foreclosure properties in the country increased by 25 percent last October as the economic crisis continues to spread like wildfire across the country. With the processing time before a homeowner is evicted from repossessed houses, the figures posted would indicate these homeowners were delinquent since February.
These figures will continue to rise in the coming months as delinquent mortgages accumulated from nine months ago are just being reflected. This continued increase in foreclosures has pulled down median home prices to as much as 50 percent in certain areas.
The $700 billion Troubled Asset Recovery Program (TARP) was initially intended to purchase bad debt and securities resulting from delinquent mortgage payments to banks and financial institutions in an attempt to address the issues on foreclosures.
However, the Treasury Department has indicated that doing so would be damaging to the banking industry in terms of recorded losses. Declared huge losses would pull down stock prices.
In this regard, the Treasury Department headed by Secretary Henry Paulson received approval from the administration that it will not use the bailout fund to purchase loans and foreclosures. He has declared to the Senate that the funds could not be used for housing and mortgage issues like foreclosed properties as the bailout program was not designed for these industries.
With the bailout plan shifting gears, a total of $125 billion has already been used to purchase non-voting shares from the nine largest banking institutions in the nation, while another $40 billion has been used to bailout beleaguered insurance giant AIG. In a positive note though, this move have stabilized the banking and insurance industries, but the same could not be said of the housing and mortgage industries which are keys to the country’s economic recovery.
With unemployment rates on the rise since September, the numbers of foreclosures from homeowners who have lost their jobs are expected to add to the national statistics. With a national program from the federal government fizzling out, the housing industry would continue to struggle in the coming months.
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