Home Mortgage Foreclosures Increased 80 Percent in 2008
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by: marciafreeman
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The home mortgage delinquency rate has continued to rise, as many home owners struggle with declining property values and more restrictive lending practices. 2008 saw an 80 percent rise in the number of foreclosures from the year before with an estimated 2.3 million consumers dealing with foreclosure. Many are predicting that those filings could more than triple in the years to come. Relaxed lending practices and over confidence that home values would continue to increase at the tremendous rate it had been during the real estate bubble had many consumers taking on a risky home mortgage. During this time, the subprime home mortgage market flourished, as more and more lenders offered loans to consumers who did not qualify for regular prime loans. Some of those people were able to take on those loans with zero down payment or proof of their wages and assets. Assuming the housing market would not go down, others placed their bets on a home mortgage with a variable interest rate. There was so much optimism about the housing market that banks were selling more and more home mortgage loans on the secondary mortgage market to be packaged and sold as mortgage backed securities. When the real estate market began to decline and the credit crisis set in, many consumers, banks and investors found themselves struggling.
Only a month into his new office, President Obama has made it clear that any plan to help stimulate the economy will include help to boost the ailing real estate sector. And any stimulus plan will certainly try to stem the rate of home mortgage deliquencies. The details of the plan have yet to be announced, but it is anticipated that the plan will offer incentives to lending institutions to reduce monthly home mortgage payments for their troubled customers. The new President has made it clear that he would like to assist those in trouble before they become delinquent. It will be difficult task to determine who will qualify for assistance and who will not. For those who will qualify, a rate reduction or a postponement of principal might be options offered to make a home mortgage more financially manageable. Modifying a home mortgage is usually less costly to a lender than to have that loan go into foreclosure, so banks and lending institutions are waiting to make decisions until they know the specifics of any plan to help the housing market. Many lenders have, in fact, delayed additional home mortgage foreclosure actions pending the details of the new Obama plan.
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