The unabated spread of foreclosed houses across the country is putting so much pressure on the Obama Administration that it eventually gave in by announcing financial incentives to both troubled borrowers and real estate lenders.
Industry experts have been calling on the Obama Administration to do something immediately to curb the tide of foreclosure properties across the country before it could derail housing recovery efforts.
Experts have been predicting that the number of foreclosed houses would reach two million in 2010 and would peak at 7.2 million in 2014.
The program to help troubled borrowers avoid foreclosure will be launched by the U.S. Department of Treasury. The program will be made available to homeowners who have qualified for the Home Affordable Modification Program (HAMP).
According to market reports, the foreclosure problem is now creeping up from low end properties to high-end ones. So far, high-end properties accounted for a third of the total foreclosures in July while houses in the middle third and bottom third of values accounted for 35 percent share each in the total foreclosures.
Compared to 2006, high-end properties now accounted for almost double the share in the total foreclosures. During the peak of the real estate market, houses in the lower third of property values accounted for 55 percent of the total foreclosures. Meanwhile, properties in the medium tier accounted for 29 percent. The top third tier had a 16 percent share of the total foreclosures.
Industry experts said that many borrowers who did not take out subprime loans are expected to go into foreclosures due to a combination of rising delinquency rates in high-end properties and the drop in the number of borrowers with improved delinquency status.
Market studies showed a significant correlation between rising negative equity and declining probability of improved delinquency status. Industry experts estimate that 23 percent of single-family houses are worth less than their mortgages as of second quarter of this year.
For the first six months of this year, foreclosure filings across the country were more than 300,000 as the unemployment rate continues to rise to its 26-year high.
Industry experts believe that the number of foreclosed houses would be reduced significantly if jobless homeowners would be given back their jobs to allow them to earn and make their mortgage accounts current.
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