Increasing Foreclosures Mocking Government And Non-Profit Agencies Efforts To Check It

July 11th, 2008

There are many cards on the table – but none seems to be working. Increasing foreclosures are mocking government and non-profit agency efforts to check it.

Spencer Bachus (Republican Ala) criticized some of the plans as being harmful. He cryptically commented, “I don’t think we ought to be incentivizing foreclosure” as quoted in the Wall Street Journal 24th April 2008. It was reported that a House panel gave the nod for a grant of $15 billion as loans and grants for local governments to buy foreclosed houses across the county. Barney Frank, the chairperson of the committee said that the bill stipulated that the houses can be bought after it had gone through at least 60 days of the foreclosure process so as to prevent abuses. “The federal government will be repaid on the zero-interest, non-recourse loans.” The repayment would have to be made in two years while loans taken to build rental units would have to be paid within five years. If the property were sold then the federal government would have to be given 20% of “any appreciation a property owner realizes at resale.”

Over this bill there were behind the scenes of sparring with regional colours. Efforts by the Midwest to stake a lion’s share from the funds were opposed by California. It has exposed the tensions between states that had been booming and others struggling with their economies.

According to DataQuick only 32% of those cowering under foreclosures in California managed to come out of the shadow by either becoming current, refinancing or selling off the house during the first quarter of this year. Thus more than two thirds of the foreclosed victims ended by losing their houses at court auctions. A year ago 52% of Californians had managed to escape the stigma of foreclosures. The residents of California took the highest number of multiple mortgages during the time of the housing boom. It peaked during the last quarter of 2006 calculating to 60.9% of all mortgaged house purchases. In the first quarter this year it fell to 15.9%.

Florida has hit the headlines with 400 kids in Manatee County becoming homeless because of the ongoing foreclosure crisis. Cleveland schools have already 1,700 students who are without houses. It is 500 more than 2007. Minneapolis schools have 5,600 such students marking an increase of 1,000 from the previous year.