Impact Of Foreclosures On The Country And The Individual

January 4th, 2008 | Tags: Foreclosures

Since last year the foreclosure clouds have become to darken and worsen. Till the other day it was rarely heard off. Today it has become a fashion of sorts. Hitherto the reasons leading to foreclosures were financial woes stemming from broken marriages, ill health or death of a wage earner. But when millions of houses are falling like ninepins under the avalanche of foreclosures the reasons have to be sought deeper into the very heart of the nation. Individual causes cannot solely be responsible for such a national tragedy.

The Bay Area has been one of the worst hit zones. It is an ideal place to take some samples to see how macroeconomics have impacted on the micro level and combined with personal fate to give a different finishing to each story.

A man from Vallejo sweated hard to qualify for a refinance but his hopes evaporated in smoke. He lost the house. But the story had a different ending for another person from Oakland. He too worked overtime to catch up on defaulting payments. But unlike his counterpart from Vallejo he managed to get his lender modify the loan permanently to a lower rate. He continued to stay in the house that was his home.

The next story is about two families who never made payments after refinancing. The family from Fairfield walked away from their house – never to come back again. But a family from Oakland determinedly continued to stay in their house – and the last we heard from them they are still there – although under a continuous pressure of uncertainty.

The foreclosure avalanche is not a story confined to borrowers and lenders – waves are crossing international frontiers. Walls Street investors are facing trouble, construction work is down with the fall in the real estate market and people are losing jobs. The government is not spared either because taxes are not pouring in while the workload in courts and police as well as maintenance departments have increased by leaps and bounds. The socio-economic picture is grim with overgrown gardens breeding snakes and mosquitoes and abandoned derelict houses being taken over by criminal gangs and drug abusers. The worst thing is that this is just the beginning – the foreclosure clouds are getting darker and more ferocious for 2008.

Mud slinging is at its peak. Should the mortgage industry be blamed or the greedy borrowers?

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