CHESSNOID

I just finished reading a New York Times articles about how the government’s efforts to help the housing crisis may actually be making it worse.  I think at this point, most people will recognize that the start of this recession was mainly due to the housing bubble bursting.  It was the first big domino that toppled all the other dominoes of our economy into economic despair.

Since most stock markets have bounced up over 50% since March of 2009, many economists and analysts have declared the worse of the recession is past us and that the economy is in a recovery mode.  Now that were in 2010, it does seem that all is well in the media headlines and that the recession was just a bad dream.

In reality, I don’t really see any real improvements. Both unemployment and foreclosure rates are extremely high and not isolated in any region.  The one government program that  was suppose to deal with the housing crisis to reduce foreclosures has been a failure.  That is why I don’t think we are out of the woods yet.  This article is the first main stream media one I have noticed to agree with what I observe.

New York Times:

Whatever the merits of its plans, the administration has clearly failed to reverse the foreclosure crisis.

In 2008, more than 1.7 million homes were “lost” through foreclosures, short sales or deeds in lieu of foreclosure, according to Moody’s Economy.com. Last year, more than two million homes were lost, and Economy.com expects that this year’s number will swell to 2.4 million.

“I don’t think there’s any way for Treasury to tweak their plan, or to cajole, pressure or entice servicers to do more to address the crisis,” said Mark Zandi, chief economist at Moody’s Economy.com. “For some folks, it is doing more harm than good, because ultimately, at the end of the day, they are going back into the foreclosure morass.”

Mr. Zandi argues that the administration needs a new initiative that attacks a primary source of foreclosures: the roughly 15 million American homeowners who are underwater, meaning they owe the bank more than their home is worth.

Increasingly, such borrowers are inclined to walk away and accept foreclosure, rather than continuing to make payments on properties in which they own no equity. A paper by researchers at the Amherst Securities Group suggests that being underwater “is a far more important predictor of defaults than unemployment.”