Foreclosures Shrugs Off Bush and Christmas

White House is congratulating itself on the mortgage relief plans but house owners sitting in the foreclosure barracks are doubtful if the help will be of any use to many. Instead of the traditional reindeers in front of doorsteps there are foreclosure auction sale notices. Palmdale Street is dotted with these and related signboards. Yet Palmdale should be benefiting from the Bush plan. Palmdale and adjacent Lancaster account for about 20% of Los Angeles County’s bank foreclosures. But all those connected with the foreclosure blues – the borrowers, lenders and agents think that the dose of the medicine is far less than the intensity of the disease or perhaps it has come too late.

Bush, in consultation with giant lenders had declared a five-year freeze on raising interests in some adjustable sub-prime mortgages. The stock market became upbeat with Dow Jones posting a gain. The relief measure could help 600,000 of the 2 million house owners about to be faced with the rise in the following moths. Those who will benefit are current on they payments but cannot afford the increase. This leaves out a huge chunk of those who have already entered the dreaded foreclosure zone or have failed on payments.

The point is that although some may benefit, the general downward trend will not be reversed in Antelope Valley. Rather it will get worse with more house owners falling into the foreclosure net. The market is already weighed down with too many unsold units. Today the work of the banks primarily centres on selling their repossessed houses. The White House plan ‘ignores the bigger picture’ says Leamer, the director of the UCLA Forecast. Unless prices fall further Californians will not feel motivated to start buying property again. Ghitammanee is lucky to be able to manage the increased rates but that will not help the falling value of his house whose equity is going down by the day. Another house near to his is listed at foreclosure auctions for $325,000 – $60,000 less than what was paid for it. Another even more spacious property is asking only $282,000.

In Palmdale and Lancaster there were 678 foreclosures during the last third quarter. Last year during the same period there were only 79 foreclosures.

It does not seem that the government plan could even scratch the surface. The roots go deeper down to the start of the sub-prime mortgage.

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