Home Foreclosure News: Should the Government Intervene or Let the Market Take Care of the Home Foreclosure Situation?


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According to a financial expert quoted in a recent Bloomberg article, the housing market recovery is still about three years away. Why? Two major reasons stand out: 

(i) The Jobless Recovery: While things are looking up, unemployment has remains high — at 9.7%, lending credence to the “jobless recovery” theory that many experts tout. Without jobs, people simply can’t afford to get back on their feet.

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And the fact that the government is throwing the kitchen sink at the foreclosure crisis to try to speed up the housing market recovery (ie, HAMP) doesn’t seem to be helping too much. It’s jobs, jobs, jobs that are the foundation that holds everything else up.

(ii) More Foreclosures to Come: According to the article alluded to above, Housing Rebound at Least 3 Years Away, Ranieri Says (Update1), there will be more foreclosures this year than there were last year, ie:

Home foreclosures probably will reach a record this year with more than 1 million properties seized by banks, according to data seller RealtyTrac Inc.

This surprises many who don’t keep a close watch on the home foreclosure crisis because many news reports are starting to lead the news with the the positives that are starting to happen on the home foreclosure front now. And while good news is always welcomed, the truth of the matter is, we’re still in deep doo doo on the housing front.

The Home Foreclosure Crisis: Danger Lurks Beneath

AND, there’s a third reason that could be a bigger contributing factor than many experts want to given credence to that could keep the housing market from recovering quickly. What is it? The homeowners that lenders are purposely NOT foreclosing on right now.

If these numbers were added in, the picture is even bleaker than you’ll hear about on your evening news or read about in your local newspaper.

Looking for a Home? Buy a Foreclosure Cheap & Enjoy Instant Equity

Should the Government Intervene or Let the Market Take Care of the Home Foreclosure Situation?

Larry Mizel, chief executive officer of Denver-based homebuilder MDC Holdings Inc., said in the Bloomberg article that:

. . . the federal government should allow homes to be foreclosed on and sold at reduced prices to new buyers.

On the one hand, this makes sense. After all, homes have never been more affordable now and this inventory will eventually be sold to qualified buyers.

With lenders being stricter than ever on home loans, one good thing to come out of the foreclosure crisis is that you’ll no longer have unqualified or marginally qualified homebuyers getting mortgages. So those who buy now aren’t likely to face foreclosure in a few years.

On the other hand, what about those who’ve lost their homes because of job loss? Remember, these are the folks who are on the hotseat now, not subprime borrowers who should have never been given a mortgage in the first place. 

The people losing their homes now are they ones that had good jobs and good credit. They didn’t buy “too much house,” or take on “exotic mortgages” they couldn’t afford.

 All they did was get caught up on a financial crisis — brought on in part by the by the shenanigans of the shysters on Wall Street who contributed to this mess — and lose their livelihoods. But the boys on Wall Street got bailed out. So it’s easy for them to say “let the market take care of the home foreclosure crisis.”

But, many who’ve lost jobs did so in industries that aren’t coming back. So, these workers have to not only look for a new job, they have to look for a job in new industries, which means being retrained. Here again, the government is trying to lend a hand via the “Obama Jobs Summit.”

So, what about these folks?

Where’s their bailout?

P.S.: Start a Business Cleaning Foreclosed Properties. While the foreclosure crisis has been a nightmare for many, it has presented a perfect small business opportunity for others. Learn how to start a foreclosure clean up business. Read how one foreclosure cleaning business owner rakes in $40,000/wk (not a typo).

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Copyright © 2010 Yuwanda Black for Foreclosure Business News. Article may not be reprinted or reproduced in any manner without the express, written consent of the author.

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