Obama Team Gearing Up for Action Against Foreclosures

February 18th, 2009 | Tags: Foreclosure Notice

The Obama team is gearing up for action against foreclosures but it will take till the third week of February for things to move. President Obama’s administration is pledged to commit $50 million to those who are battling foreclosures. It was welcome news to the front liners but the details of the plan will not be released till another week. Moreover the step might not be strong enough to prevent the foreclosure crisis from further worsening.

According to housing advocates and counselors during the last two years the government’s response to the foreclosure crisis has been a grim failure. The administration of President George W. Bush is being blamed for insisting on voluntary measures depending on the initiatives of the lenders. The use of public money for foreclosure prevention has not produced the desired results. There is anticipation that President Barack Obama will be more successful – especially at a time when foreclosures are continuing to grow.

According to a report released by Credit Suisse the apprehension is that by 2012 there will be as many 10 million foreclosed units. This of course is related to the intensity of the raging recession.

On Tuesday 10th February 2008, Obama said, “The question is – can we work to design a system where the banks recognize it’s in their interest to avoid foreclosure?” He was speaking at Fort Myers, Florida – one of the worst devastated regions where foreclosures have led to housing prices to fall to an all time low. Obama said that within few weeks he would detail the steps he would take to tackle the problem.

The price of residential houses most probably will not hit the lowest point before the close of this year.

Moody’s Economy reports say that the home values will plummet by 50% in 30 metropolitan regions of California, Florida and Nevada before the story of the housing bust draws to a close. Over 60 % of other metro regions will see prices tumble by 10%

Central Connecticut has not seen sharp falls in housing prices. But this region has sharply focused the failure of federal programmes. Only $14 million from $134 million set aside for foreclosure assistance has been spent last year.

It is expected that Obama will push a move for empowering bankruptcy judges – a step that will be vehemently opposed by the mortgage lobby. The latter fear that this will lead to increase in interest rates, as the lending group will try to cover the extra risk involved.