The housing crisis that had so far been confined to some pockets are now spreading with foreclosures teaming up with loss of jobs to push people out of their homes. The rate of foreclosure in 40 counties of USA that are far removed from areas with concentrations of toxic mortgages are now showing 50% increases according to RealtyTrac. Boise and Green Bay in Wisconsin are some of these areas.
Susan Wachter of Wharton School (University of Pennsylvania) said, “The ripple effect is just broadening out to cover a lot more places.” The 2007 foreclosures were caused by the sub-prime mortgages but the latest crop of foreclosures is because of the recession that has caused an unemployment crisis of staggering numbers.
Ron Sims the Deputy of HUD said, “What we’re seeing now are people who are being impacted by the slowdown.”
RealtyTrac notes that across the nation foreclosures in May were 18% higher than May 2008 after having dipped modestly in April.
The increase is notable in regions removed from the centres of the crisis. The 40 counties were stretched from Hawaii to York in South Carolina. The rates however are not as bad as either California or Florida. In Green Bay the monthly average was one foreclosure to 458 units while in Los Angles it was one for 178 homes.
The crisis is dragging on because of the high unemployment numbers said Dan Rowe a realtor of Boise. Foreclosures have doubled in that area from 350 per month to 770 as per the findings of RealtyTrac. The rate is now close to that of Los Angeles.
Foreclosure postings in 500 counties were scrutinized by USA TODAY during the month of April. In March President Obama announced that the government would grant $75 billion to help those struggling with mortgages that have gone underwater. It will not be of help to those who are unable to keep their mortgage commitments because of the recession. Sims commented, “When people don’t have any income,” Sims says, “then it becomes really, really tough.”
The bailout money that had started flowing from the time of the Bush administration so far has not had much impact on the sheer staggering number of foreclosures. The recession has made matters worse while experts debate what started the vicious circle – with the housing crisis feeding recession. There are plans afoot to strongly regulate banking practices but this too is facing opposition even from the Democrats.