One of the largest problems right now is the down turn in the housing market and the growing number of foreclosures A big part of that of course has been those subprime borrowers who can’t afford ballooning mortgage payments, so how are cities across the nation dealing with this?
What is happening in most cities as it relates to subprime mortgages and high foreclosure rates, is the same thing that is happening all over the country right now. This is an issue that affects just about everyone, whether you’re a borrower, whether you’re a buyer, whether you’re a municipality, whether you build homes, because if you have this many forecloses what happens is property values are reduced. Then you look at the housing market and you have more houses on the market than you’ve had and it and it just causes problems, in many, many ways. Statistically in cities all across America the cost of one house that’s foreclosed on to a city as it relates to the additional costs of police, fire protection, doing all the things that are necessary, averages costs to cities is around $ 22,000 for every foreclosed house. There are many things you have to do to make sure that people aren’t getting in there and even reducing the property values of these houses more.
What has to happen, first of all is the federal government has to a better job. Regulators have to do a far better job seeing what’s happening as it relates to these lenders and stop fixing these types of problems after they occur. There were many signs of what was to come, every market including the housing market has cycles. This really should not have come as a surprise. The other thing right now I know people are calling for is a moratorium. We don’t know if this is a good idea or not but its something to consider. Another option could be an mortgage emergency fund which can help get with these home owners to help them so that do not loose their homes. This is by far the most costly outcome for both you and every home owner in America.
You also have to look at in future, making sure that first of all you give mortgages to people that actually CAN afford the home and not look at some asset based formula were you would give a person a mortgage based on the value of there home rather than what how much money they make. How can a society ever sustain itself this way?
Also we have to have the federal government that has do more as it relates to working with people before they buy homes. We need to have more home buyer education because it has become so easy to purchase a home that literally people can sit at the dinner table and make a decision to buy a home with a 100% mortgage, 6% seller concession and virtually no money out of their own pocket. It is absolutely great that home ownership has increased but not at this expense. Buying a home should not be considered in the same light as buying a loaf of bread. As for the government and this problem, they NEED to look at these situations as they happen, even before they happen. We have to be more proactive and look at who’s doing the lending to see what their record actually is for those who exhibit a history of having a lot of foreclosures.
For instance, if you’re trying to sell your home when you have additional foreclosed houses on the market you have a negative affect on the value of your house, then all the values of all the properties go down. When you have people that want to take out some equity as it relates to fixing up there home they don’t do that anymore, they just cannot and that really hurts the economy in many ways.
How important is all this really?
About 82% of our countries gross domestic product occurs within our metro economies, thus within cities and the metro areas. In fact, if metro economies and cities were a nation there would be 42 nations in the United States. Now add the adverse affects of 2.2 to 2.4 million foreclosures that average say just $200,000 per home, additional expenses for the local municipalities of roughly $22,000 per home – the economic impact is really not even completely discussed here.
How else are we affected? How are Americ’s families and neighborhoods impacted? How about the children, the millions of innocent faces?
Please contact your Attorney General to make the subprime lenders responsible and also take a look at the elected officials who receive thousands and sometimes millions of dollars that are donated to their political campaign by those unscrupulous lenders. Attorney General Contact Information, Congress and Senate.
Tags: Foreclosure Market, Subprime Mortgage
