The Foreclosure Chain Of Action And Reaction

July 23rd, 2008

The foreclosure chain of action and reactions have become all too common – house is bought via mortgage route, borrower cannot afford to keep to commitments, lender or bank forecloses, property lies vacant blighting the locality until the court tries to auction it off. If it is not sold then the bank repossesses it and tries to sell it.

In recent years one of the worst victims of this foreclosure scenario is Madison County. Recently the focus has been on Elmwood where as much as 7% of the houses that are owner occupied are in foreclosure. In June there are 400 units lying vacant. In a city of only 2,508 owner-occupied units, the percentage is alarming – to say the least.

In Pendleton the foreclosure story continues in the same vein. Nearly 8% of the owner-occupied houses are in foreclosure. In Anderson the number is 5%. The epidemic is national and not just confined to Madison County.

When jobs go and pensions fall sometimes foreclosures become inevitable. The only solution is pulling up the economy with jobs and better social security. A county wide aggressive exercise in local development is the call of the hour. The other reasons for rising foreclosures is irresponsible borrowing as well as predatory lending.

Presidential candidates McCain and Obama have both outlined plans for tackling the foreclosure crisis primarily by cracking down on unethical lending. McCain suggests that those owners who live in their mortgaged houses should switch over to manageable mortgages. He also advocates the setting up of a judicial task force that would investigate and penalize fraudulent practices in the mortgage world. Obama proposes tax breaks for foreclosure victims by doling out $5 billion for those who earn less than $50,000 annually. He chalks out an expenditure of $10 billion for counseling and for enabling local administration to work with grass root organizations for preventing foreclosures. He also wants a Federal Housing Administration that will encourage the conversion of floating interest mortgage to the conventional fixed rate category. On pen and paper both the plans are bold and deserve merit but to translate it into action will require dipping into the taxpayers money.

For the moment Madison County is concentrating on making available paying jobs and tightening procedures against fraud by lending bodies together with setting up of counseling agencies. The great American dream of owning a house has become a nightmare of foreclosures in Madison County.

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