Foreclosures - The Hole In The Usa Financial Net

Foreclosures are creating headline right across the length and breadth of the country. Since the past few years lenders have been aggressively doling out loans willy-nilly. Most of these have been to least suitable borrowers with shaky credit history and vague income sources. Down payments were waived and for the first few years only the interest had to be paid. The risk was covered by a high rate– it being much higher than traditional loans. These loans are known as sub-prime. The shortsighted policy led to a collapse. Borrowers just could not pay up.

Within a short time the loans have dealt a blow to the mortgage industry. Borrowers of all shades, whether good or bad, are finding it impossible to get new loans. Reckless behaviour of the mortgage companies yesterday has caused them to down their shutter today. With a jump of interest rates the house owners are finding it impossible to pull along. They are defaulting and houses are falling one by one like cards. The current scenario points to more than 5% house owners failing to meet commitments. Of these the bulk of the offenders are sub-prime borrowers. Proportionately the number of people actually dispossessed is still comparatively less.

The crisis is exposing the big gaps in the country’s financial protective net. One of these is concerning the fate of those thrown out in the open because of foreclosures. It is not just the physical dispossession but also the trauma of tearing apart family emotional bonds that has a telling effect on society.

The house is not just a brick and mortar structure. It is a home with ties that extend beyond the walls to neighbours and comforting friends. There are memories and ties that are part of the stuff called life and living. All this loss added to the feeling of financial inadequacy triggers off massive depressions. It leads to people sneaking away with head hanging low leaving behind everything – even wedding photographs and mementos.

Unfortunately the story does not end at this point of departure. With the bad credit report it is difficult to find another accommodation – even a rented one. Landlords have become wary. The advice is to look as soon as the warning signals of impending doom begin to blink. At the last minute it will be difficult to squeeze in anywhere even with bare personal items.

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