An improving economy
A restaurant in New Orleans suggests "Foreclose on the Banks." Image from Flickr.
The media and Uncle Sam want us to believe that times are getting better and that we are crawling out of the recession. In fact, there are some economic indicators that the economy is starting to come around.
The last few weeks have provided an increase in consumer spending, a slight decline in the unemployment rate, and the Dow Jones even broke 10,000. However, this may not be enough of a change to get excited yet. There are major economic indicators that are not providing such positive results.
The high rate of foreclosure
The 3rd quarter of 2009 has seen a record number of homes in some stage of foreclosure. The total number of foreclosures for this period was 938,000 compared to 890,000 for the previous three months. It is estimated by RealtyTrac Inc. that the total number of foreclosures for 2009 will exceed the 3.5 million mark. This is up from 2.3 million for 2008.
Gradual increase in total foreclosures
The pattern for all of 2009 has pointed toward an ever increasing number of foreclosures. Each quarter this year has provided even more staggering numbers than the quarter before it. The first quarter ended with 803,489 which was an increase of 9 percent over the last quarter of 2008. This was followed by an increase of 10.5 percent in the summer months and a 5 percent increase the past quarter.
Total foreclosure filings
The indicated foreclosure rates include default papers, auction sale notices and repossessions. These numbers are being partly blamed on the unemployment rate that is at a 26-year high.
Another major factor of this rate is that housing prices have plummeted, and some homeowners are severely under water – meaning they owe more than their homes are worth. These combined factors can remove the incentive for homeowners to keep up with mortgage payments.
The Government’s solution
The Obama administration has implemented steps to try to curtail home foreclosures from plummeting even further out of control. These steps have been aimed at encouraging financial institutions to offer mortgage modifications to those homeowners that are distressed. One of these programs is Hope Now, an organization set up to assist with mortgage modification negotiations.
Obama announced the beginning of October that 500,000 homeowners have been assisted by the government’s mortgage relief effort. While this is certainly a milestone that should be recognized, this help has been provided to 500,000 distressed homeowners out of the over 2.5 million homeowners that have faced foreclosure so far in 2009. The problem is that the rate of new foreclosures exceeds the rate of those that have been assisted. “The sheer scale of the problem is preventing the loan modification programs from having the kind of impact we’d all like” said Rick Sharga, RealtyTrac’s senior vice-president for marketing.
Some areas have seen improvement
While the National numbers are up the rate of foreclosures for some states are actually on a decline. New York has reported a drop in the amount of foreclosures for the third quarter of 2009. The overall numbers of foreclosures for the third quarter in New York were up 19 percent over the same period of the year before, but they are actually down 10 percent from the rate of the previous quarter.
Other states have seen signs of improvement as well. The first quarter of the year, California and Florida had the highest number of foreclosures. As of the third quarter they are ranked third and fourth with Nevada topping off the list.
September’s foreclosure rates are lower
RealtyTrac reported that the number of foreclosures nationwide for September were 344,000 down 4 percent from a month earlier. However, this number is still the third-highest month since the report started in early 2005. It was also the seventh straight month in which more than 300,000 properties filed foreclosure. These numbers may imply that the peak has been reached and the turn-around is slowly beginning. Only the rest of the year will indicate if this trend continues.
For sure that's the worse moment ever! It's something that was expected by the specialists
The problem is that all solutions made by Obama and the government are failing. Things must be changed or we will fall due to this crisis