Following 18 Months Will See Worsening Foreclosure Crisis

November 22nd, 2007 | Tags: Foreclosure

Many factors have contributed to the foreclosure tsunami but the prime accusing finger points to the sub-prime market that has caused falling real estate prices. The question is why were the authorities concerned lax enough to allow the situation to spin out of control? The alarm bells are ringing – things will worsen during the next year and a half at least. This is the apprehension of US Treasury Under Secretary for Domestic Finance – Robert Steel.

A Town Hall Forum was organized by Senator Coleman to discuss the foreclosure problem that has in its grip Minnesota. At the conference was also present Robert Steel, Richard Todd (Vice President of Supervision, Regulation and Credit, Federal Reserve Bank, Minneapolis) together with house owners, tenants, community organizations and relevant experts.

The point being driven home is that the crisis is infecting all sections of the society and economy. The remedy should focus on the present as well as the future. It should not be allowed to be repeated. Minnesota is ranking fourth in the foreclosure race with more than 4,000 foreclosures in the third quarter only. This calculates to a 152% increase.

Robert Steel underpinned the seriousness of the problem when the country is going through a period of fluctuation in the housing and mortgage sector. Fortunately the background is a sound economy – in the nation and abroad. However the impact of the housing economy cannot be ignored. It is not just a question of numbers but something well beyond that roping in all sections.

Foreclosures are not new phenomena. It occurred even when the real estate market was strong. During 2001 and 2006 the numbers have however gone up alarmingly with 650,000 being touched by it. More sub-prime loans are about to reset to higher rates in the coming months. However it does not mean that all will end up with foreclosure. Some will be able to afford the new rates while many will be able to settle for refinancing. Quite a few will be unable to pull along having reached their nadir. Many had invested hoping for quick profits. For them foreclosures cannot be avoided. Speculators do not concern the forum. The problem in front is concern for those who had set up homes in these houses – their primary place of residence. HUD has come forward in a big way to coordinate matters.

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