If you’re out of work, and wondering how you’re going to pay the mortgage, and worrying about whether foreclosure is soon going to darken your doorway, you might have thought they’re be some sort of program to help you out.
Given that the official unemployment rate is now 9.1 percent, and the U-6, the broadest measure of unemployment is now around 16 percent, maybe higher, you’d think the government would want to get you out of foreclosure trouble, because the number one reason people are getting into foreclosure trouble is because of unemployment.
But you’d be wrong. While the government set up a program (well-touted by the media, including me) last year to help unemployed homeowners avoid foreclosure by not making payments for three months, the average out-of-work American has actually been unemployed for nearly a year.
Three months won’t cut it. And, the temporary drop in the number of foreclosures is only about processing problems and lawsuits, I’m afraid. It’s not as though more people are making a lot more money and getting their financial lives back on track.
There was so much bad housing news last week. Housing prices have fallen (nationally) to prices levels last seen in 2002 (which would make you think the bubble has fully popped – but not completely). In Atlanta, home prices are back to where they were in 1999 (that varies by neighborhood, of course). Meanwhile, in Chicago’s North Shore, I had dinner and drinks with a homeowner who told me that despite having a Groupon executive living in the neighborhood, he believes his house is worth just about what it was when he bought it 20 years ago.
“I think I’m about even with the modest improvements we’ve put in,” he said. “But after 20 years, you’d have thought we’d be a bit further ahead on home values.”
The New York Times offers an excellent assessment of what’s going wrong with the government’s HAMP unemployment program (just over 7,000 homeowners have qualified – worse than a rounding error), including a lack of participation from lenders, confusion in the marketplace and what has seemed to be the continuing problem: Over-promising and under-delivering.
It’s just disgusting.
Questions and Comments about Foreclosure on Today’s Ilyce Glink Show
Bill – The banking industry is responsible. I was out of work for two years. I taught music part-time to stay afloat. Just got my property tax appraisal from the county. Last year, they said my house was worth $151,000.This year? $70,000. I bought the property for around $68,000 in 1988. Thirty years later, it’s worth what I paid.
David – There’s not only a profound distrust of the bank, but of failed federal policies. We’re losing trust in government to dealing with big problems. In Tucker, there’s a foreclosure near where I live that’s been vacant for four years. A house has been on the market for two years, with no offers.
Walter – I was on the CNS bank board when Bill Clinton was president. First, they stopped the banks from redlining. Then, Fannie Mae and Freddie Mac came out with guarantee programs. If you guarantee something, someone will buy it. That’s when this all started.
To hear the rest of today’s comments, please check out the radio show when we get it posted later this week.
Want to Invest in a Real Estate Investment Trust (REIT)?
We had a caller who asked where she could get additional information about REITs. The best place is the National Association of Real Estate Investment Trusts (NAREIT). Their Website is now combined with REIT.org. Here’s a link to the individual investors’ page on REIT.org.