Did You Know…
A recent reading of the Case-Shiller house price catalog reveals that the largest depression in house prices in the past twenty years, has been in the year 2007, which is a decrease of about 8.9%. According to an online website that keeps record of foreclosure increase or decrease in the market, the number of foreclosure reports that were filed had had an increase of 64% in January compared to the previous year. The number did decrease an approximate of 4% in February.
This decrease in house price and increasing foreclosure is likely to persist in the economy because nothing noteworthy is being done to address to the problem. To put a stop to the foreclosure problem, immediate initiate must be taken to modify all the bad loans and also, attempt must be made to improve the asset quality in the market.
The bailing of Bear Stearns Cos. is certainly not a solution to the house price and foreclosure problem but it does represent the decreasing willingness of the authority to help Wall Street and the general public who are all in a bad loan problem. According to Kurt Eggert, a law professor in OC,
It is obvious by now that there has been no official attempt to help low-income homeowners in financial distress, as also confirmed by Danilo Pelletiere, who is a research director at the National Low Income Housing Coalition.
Some programs have sprung up to help the people, however, many such programs narrow down their criteria on who they are willing to help, by imposing requirements for being eligible to accept help. Even though at least some initiative has been taken, it is merely enough and the outcome is insufficient. Something will definitely need to be done on a wider scale.
A plan has been made to make the Treasury Department purchase loans and to be offered by the government to the public after modification of loan to make it more relaxed, with lower interest rates. This plan is of a three-year duration program called “HELP Now”.
According to Dean Baker, co-director of the Center for Economic and Policy Research, the numerous plans that have been made to help the homeowners in distress will not only help the homeowners, but are also likely to benefit banks and other organizations that may be suffering from the similar mortgage problem. However, the condition in the market is such that, owning a house is certainly going to be more expensive than renting.
The concluding thought is that, every attempt should be made to help the public in general. Numerous programs to aid the people have sprung up and the people can only hope that they continue to. Helping the people, as a result, will help the economy. However, is this the best way to help the problem?
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