The Impact of the Foreclosure Crisis will be Felt for Many Years to Come
Despite various measures the foreclosure modification plans are not taking off and the delay is causing pain to the housing sector and the entire economy. It has led to hot debates. Many are of the opinion that is better to allow the foreclosures to happen immediately rather than postpone the inevitable.
Since the numbers run into millions everybody is feeling a bit shaky and thinking that the pain will be lessened if it is allowed to drag on for many years nursing a hope that by that time recovery will automatically happen.
It seems that the last course is being followed – come what may.
The process of foreclosing is taking much longer than previously for many reasons. Efforts are on to modify loans, there is a shortage of staff with the loan servicers and bankruptcy filings have shot up. Another reason is that lenders are not foreclosing because they are reasoning that the housing market will pick up in near future and their losses will be lessened. In those states where the judicial process is followed, foreclosures now run on for 19 months to 29 months.
In other states the time stretches from 11 months to 17 months. Ivy Zelman of Zelman & Associates said that while modification will be of help to some of the borrowers but in most of the cases it will tantamount to “kicking the can down the road.”
There are some who are not in a gloomy mood. One of them is Glenn Boyd of Barclays Capital. Analyzing the previous trend he brought down his estimated calculations about the number of foreclosures that would enter the market with economic improvement. He now thinks that the inventory of residential units held by the lenders will reach it peak in the second quarter of 2010 to touch 900,000.
Hitherto he had calculated the peak figure to be 1.15 million in the middle of the following year. However he thinks that prices of homes will drop by another 6% approximately before reaching the bottom in the first three months of 2010.
Henry Fishkind is an economist based in Orlando. He thinks that banks are holding back the inventory because it is to their interest not to flood the markets. Regulators are quiet on this matter helping them. It means the pain will be dragged on for years. This will cause less sudden disruption to the housing sector.
- Home Appraisal Codes Being Revamped so as to Avoid Rerun of Foreclosure Crisis
- Foreclosure Crisis Led to Recession Bringing Changes in American Capitalism
- Lack of Education has Been to a Large Extent Behind the Foreclosure Crisis
- Foreclosure Crisis Imposes on the Dreams and Nightmares of Americans
- The regulators as well as the executives are equally to blame for bank failures linked to the foreclosure crisis
- Adam Smith and John Keynes on either side of the court facing the foreclosure net
