Foreclosures rise as more and more homeowners fall behind their mortgage payments. The blame is put into the weak economy causing lots of homeowners to lose their jobs and lose their only means of paying their mortgages.
A lot of foreclosure plans have been derived by the government, the lenders, and the banks just to help distressed homeowners but it will not do much help anymore. The foreclosure crisis has left homeowners unable to afford loans on any terms, and no bank or federal programs will provide them relief.
Loan modification plans have been proposed to adjust interest rates to drop it at a more affordable level, about 31% to 38% of a homeowner’s gross income. However, this does not help much for those who have so much less to no income at all. Unemployed borrowers have to be assessed on a case-to-case basis first.
Mortgage Bankers Association has reported that about 1.2 million properties have been foreclosed in the second quarter of 2008. Consumer advocates and lawmakers of the Bush administration have pushed banks and officials to do their best to help distressed homeowners.
More foreclosures will lead to further home price declines and a weaker economy, so this cycle has to be broken. Rising unemployment rate has to be stopped as it has already reached its highest level by now at 6.5% in more than 14 years.
2 million more families are expected to face foreclosure in the next two years. Lots of homeowners have been calling for help.
For those with greater possibility of getting a new job with the same income, a forbearance or short-term modification can be offered by the bank. But for those who have trouble in getting new jobs, there are fewer options like a short sale.
The government has to create more jobs to make the economy recover. More jobs would mean less foreclosures and better home prices.
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