CHESSNOID

There is a positive and negative spin for every issue.  Take foreclosures for instance.  There are two articles that highlight the truth in different ways.  One article is called U.S. foreclosures slow a 3rd month; lull temporary while another article of the same information is called   US Foreclosure Filings Surpass 300000 for 8th Straight Month.  I like to think the first one is a very positive spin and the second one is a more negative tone.

The distinction is important because if we don’t recognize that a problem exists and how extreme it is, then we can not begin to work on an effective solution.  If we focus on the reality that at the pace of 300,000 homes for one year equals 3 million foreclosures, then we can see why the economy has slipped into a severe recession and why its true effects will linger on for many more years.

Nov. 12 (Bloomberg) — U.S. foreclosure filings surpassed 300,000 for an eighth straight month as unemployment made it tougher for homeowners to pay their bills, RealtyTrac Inc. said.

A total of 332,292 properties received a default or auction notice or were seized by banks in October, up 19 percent from a year earlier, Irvine, California-based RealtyTrac said today. One in every 385 households received a filing. The tally fell 3 percent from September, the third consecutive monthly decline.

“The foreclosure problem is still with us and will keep prices down,” Stephen Miller, chairman of the economics department at the University of Nevada at Las Vegas, said in an interview. “The real issue is we don’t know what inventory banks are holding that they have yet to put on the market.”

Distressed real estate transactions accounted for 30 percent of all home sales in the third quarter as the median price fell 11 percent from a year earlier to $177,900, according to the National Association of Realtors. U.S. unemployment surged to a 26-year high of 10.2 percent in October as payrolls fell by 190,000 workers, the Labor Department said last week.

The Obama administration’s solution is the second part of the Bush administration initial plan to avoid foreclosures.  They have wanted banks to modify the loans that people are defaulting on or can no longer afford because of the tough economy.  The results have not been promising and avoiding to acknowledge the government effort has failed only exacerbates the true problem.

Los Angeles Times:

WASHINGTON (AP) — The Obama administration’s mortgage relief program has reached one in five eligible homeowners, a government report says, but most of those borrowers are on temporary trial plans that have yet to be made final.

As of the end of October, more than 650,000 borrowers, or 20 percent of those eligible, had signed up for trials lasting up to five months, the Treasury Department said Tuesday. The modifications reduce monthly payments to more affordable levels.

To make the change permanent, though, borrowers must complete a big stack of paperwork and show they can make their payments on time. At the beginning of September, only about 1,700 permanent modifications had been made. The Treasury Department expects to release updated data later this month.

The Treasury claims 650,000 have signed up but only 1700 permanent modifications have been made.  Basically, out of over 3,000,000 that are eligible for the program only 1700 have been permanently helped.  (There are many millions more that don’t qualify for the Obama program that will go into foreclosure).  I have identified the problem for our government to use and now all they have to do is focus their efforts on solving this problem.

The housing bust started the recession and until this market has stabilized, the recessionary effects will linger.  The $8,000 homeowner tax credit is not the solution to foreclosures.  That is incentive for people to buy homes in a falling housing market and nothing more.  I qualify for the credit and purchased a home, but frankly I would of still bought one without it.

I will even go one step further in that the government can follow the example of  NACA to help stop foreclosures and force banks to modify the loans.  Heck, we own most of them now anyways.  There is no good reason to keep throwing money at the banks to bail them out.  Most of that tax payer money is not being used to get the economy going.  They have gone to pay for company parties, employee retention, and CEO and executive bonuses that total in the billions of dollars.

Detroit Housing Apocalypse

There are numerous cities like this in America right now. We need real solutions to these extremely real problems. Our government needs to stop wasting money on bailouts and deal with our foreclosure epidemic which has caused unemployment to skyrocket and the economy to collapse.