Foreclosure Disaster
We spend billions of dollars a day in God forsaken places most of us never heard of and I believe we can show a little compassion steering some of those funds to help our own.
The economy may be booming according to Wall Street and the Dow but everyday folks are not quite sure about it. While most prices for goods remain rather stable and consumers can still buy groceries at more or less reasonable prices, the job market is not that great. Many new positions are open but they reflect the lower end of the salary scale. Places like fast food restaurants, service industry, small manufacturing, sales and routine office jobs comprise the bulk of offerings where entry level pay goes from minimum wage to not so desirable for someone with a family.
In fact, what used to be a summer job staple for teens in the past has become a sought after position for heads of households and also retirees trying to compliment their social security checks. For those who don’t believe we’re in a crunch and just listen to the news from the Stock Market, one sole indicator could waken them up: Gasoline prices. As soon as there is a run at the pump and filling up becomes a problem we start hearing the cries of consumers everywhere. Why is that? If the economy is so good, it shouldn’t have such an impact in our wallets but it obviously has. People are counting their pennies sometimes simply because almost anything that increase in price can damage their budget, and that is if they have a budget.
The recent problem with the housing market is the most extreme of this situation. Thousands upon thousands are going into foreclosure with no end in sight. Sure, the analysts can blame consumers for entering into mortgages they can’t afford and greedy lending companies dispensing loans to many who shouldn’t have qualified in the first place.
However, not all homebuyers are defaulting because of this but other reasons, unpredictable at the time of the original contract. Reasons as poor health, loss of work, family problems, natural disasters and the economy itself.
Many of the new owners now in default are self-employed people, who in one way or another have seen their income reduced, not because of their own doing but rather because of the economy in general. When the population as a whole makes less money it affects us all.
One glaring example is that of real estate people. They have the goods, boy the have goods coming out of their ears! If the economy is so good as it’s being said, where are the buyers? Or is it that only those with poor credit and no verifiable income, stripped now of the possibility of purchasing a home were the only buyers? The reality is that many who would want a home can’t qualify given the restrictions on loans.
On the other hand, the government is doing very little to find a solution for this problem. Instead of allowing so many thousands or hundreds of thousands loose their property, the Feds should come up with what I believe is a creative solution to the rescue. That is, step in and offer the companies holding mortgages in peril the cash needed to bail out those home owners for at least a period of one year, until they recoup from the present blow and the economy starts moving again.
The present situation, letting people loose their homes and lenders taking possession of the properties will hurt the market in a far worst manner. First of all, we’ll have and enormous amount of former homeowners out on the street. Some, may find a decent rental, others will make do in some other way with relatives or friends perhaps and a few may even windup using social services and become Section 8 tenants.
Second, lenders will ad even more to the already depressed market by including all those properties for sale once again, this time at probably lower prices to get rid of them and damaging the general market even further.
Families who have lost their homes, will have a tougher time resuming their normal lives, not only because their credit has been ruined for many years, but also because the uncertainty of where they are going to live ads to the pressures of everyday life, from where the children are going to school, to the search for work, or even worst for those who are self-employed since they may not have a place to create an income anymore.
What’s to gain with the present situation that punishes customers? Nothing really. We will see an increase in foreclosures, until all of them are out of their homes. Lenders will have to sit and wait until new buyers take over the properties they are repossessing. Prices of homes will go down even further, if for no other reason because the homes taken by lenders will enter the market to compete with existing ones. A whole segment of the population will have to live as pariahs for a long time because their credit has been ruined and we all pay one way or the other the consequences of this problem.
I’m leaving out of the equation speculators and greedy investors who bought properties left and right, not because they needed it but because they hoped for a future sale to make a profit. I’m only talking about helping the regular Joe who bought a home for his family and lives in it. Those people, whether their fault or not, should get some help.
We spend billions of dollars in God forsaken places most of us never heard of and I believe we can show a little compassion steering some of those funds to help our own.
posted by frustimista @ 4:26 p. m.
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