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Impact of Foreclosed and Pre Foreclosure Homes Heaviest on Taxpayers

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By : John Cutts    99 or more times read
The huge amount of foreclosed and pre foreclosure homes is hurting taxpayers more than it does lenders, according to a number of housing industry analysts. They argued that the perceived loss to banks of selling a distressed or foreclosed property is not as huge as generally believed. They further added that it is the general public who shoulders a big percentage of the dollars lost to foreclosure.

Gilbert foreclosure homes and distressed property numbers from other areas of the state rose again in 2010, giving Arizona one of the highest foreclosure rates in the whole nation last year. Analysts stated that these figures are more significant to regular homeowners and consumers in the state than they are to lenders and banks. According to experts, majority of foreclosed properties these days are associated with loans backed by federal government-supported entities like Freddie Mac and Fannie Mae.

They stated that losses incurred through foreclosure homes in Arizona are mostly shouldered by these two mortgage agencies since they own almost half of all home mortgages issued in the state and the whole country. Since taxpayer money supports both agencies, the loss is eventually passed on to people who pay their taxes. Losses that will be incurred by both Freddie and Fannie are expected to reach around $400 billion before an end to the housing industry crisis happens.

Analysts also stated that investors also shoulder a big part of the losses incurred from foreclosures and pre foreclosure homes. Majority of the mortgages that failed in the past four years have been resold by financial firms to investors, and whenever these mortgages fail, investors absorb the loss.

The losses from foreclosure homes passed on to investors can also spill over taxpayers' pockets, analysts have stated. They explained that majority of real estate investors are pension funds owned by the U.S. government and other federal entities. They added that every time the government bails out a troubled pension fund, taxpayers pay a bit more.

Financial experts stated that the last entity to hold the mortgage for foreclosed or pre foreclosure homes will likely take the biggest loss, and most of the time, the buck stops with the taxpayers. They stated that further efforts should be exerted to help homeowners retain their properties since any loss will hurt all Americans.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.

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