Foreclosure - Unemployment, Underemployment, Politicians and Bureaucrats

There housing sector is being hobbled by two factors – the bureaucracy and unemployment. Unemployment and underemployment has reached massive levels. This has caused the number of buyers to drastically shrink. Moreover the existing house owners are unable to hang on to their properties leading to staggering number of foreclosures.

With confidence gone owning houses remains a dream only. The realtors are dissatisfied with the way the politicians together with the bureaucrats are going ahead with contradictory housing policies. This year 2012 is an election year and this means more talk than action.

The Federal Reserve in a recent report noted that progress was curtailed by the weak housing market and is posing mega barriers to a strong recovery of the economy. The recommendations focused on how lending is being made more easy by Fannie Mae and Freddie Mac.

Following this, few days afterward Freddie Mac said it would authorize its servicers to grant to troubled house holders an extra six months of forbearance; the unemployed among them would get relief up to a year. But considering the track record of the servicers in implementing previous government programmes (HAMP/HARP) and dismal failure in modifying mortgages even for a short term it is doubtful how far this time they will be effective.

There is no silver bullet for the entire country. There are instances of many local programmes being implemented by local banks. These banks do not hit the headlines with their fraudulent activities like Bank of America.

The latter bank has come to a settlement for an amount that has set a record in American history, with the authorities, for the sins BofA inherited from Countrywide when the same was acquired. Countrywide had steered the minorities towards dangerous risky loans intentionally.

Boston Community Capital and Stabilizing Urban Neighborhoods are two agencies helping troubled owners of Massachusetts to retain their homes. The programmes were launched in 2009 and since then over 125 households have been helped.

Describing the move Ben Bernanke, the chairperson of Federal Reserve said, “A community development financial institution called Boston Community Capital is pursuing an innovative strategy to prevent occupied homes from becoming vacant and creating a strain on the community”.

Using special funds it is purchasing foreclosed units that are under occupation from the banks at current rates. The previous house owners then stay on as tenants with future schemes that will enable them to buy back the house.