176,446 New Listings - March 2010 - Last update March 19, 2010 6:15 AM ESTForeclosures on the Rise as People Lose Jobs
The US economy is on a tailspin what with unemployment reigning high. As people lose jobs, they are finding it difficult to make mortgage payments. Hence, foreclosures have become common. The Federal government has come up with a program to help harassed homeowners. Under this “Making Homes Affordable’ program, loans are being revised initially for a period of three months and then permanently.
In San Diego, the situation is particularly grim. There are many owners whose homes have a negative equity. That means they owe more on their homes than what they are worth. The government has admitted that the effort is too small in comparison to the number of default cases on the rise.
The Treasury Department has, however, revealed that the Home Affordable Modification Program, or HAMP is clearly ahead of its 1st November deadline. Lenders have already modified loans of half a million home owners.
However, there was a piece of bad news that the effort was not enough when compared to the number of foreclosures that would hit the nation in the next few years. The number would be far more than what the government had thought when it came up with the $42.5 billion loan modification program early this year.
A major problem seems to be the bureaucratic hassles that the lenders are mired in. Progress has been rather slow and bankers are saying that it could be because they had never handled a similar situation earlier. With unemployment increasing by the day, the rate of default has been high and experts are not sure as to when the tidal wave of foreclosures would cease.
What is worse, the employment scenario remains bleak and people have to grapple with lower income levels. Mortgage broker Mark Goldman says that people are finding it difficult to meet the loan commitments because of unemployment.
Layoffs happen to be the main reason behind the foreclosures. True, there have been people who had taken out risky loans or borrowed heavily on home equity but many are decent professionals who had made decent down payments and taken loans on fixed mortgage rates. These professionals are now defaulting because they do not have the jobs.
It has become a vicious cycle now and the real estate sector is succumbing to the problems of a depressed economy. Experts say that unless the employment scenario improves it would be difficult to keep the number of foreclosures at bay.
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