2.3 Million Foreclosures on Mortgage Loans

President Obama will be in Phoenix, Arizona tomorrow to announce the plan his administration hopes will boost the dilapidated housing market. It is expected that $50 billion of the current economic stimulus bill will be set aside as a housing relief plan. Reducing the number of foreclosures and defaults on mortgage loans will be a primary goal of the plan. An estimated 2.3 million homes were foreclosed this past year and many analysts predict that the number could reach as high as 10 million in the coming years, if the recession continues. The state of Arizona has one of the highest foreclosure rates in the country. The state is also struggling with the economic downturn, as unemployment was nearly 7 percent at the end of the last year. By choosing Arizona as the place to unveil the details of a plan to help the housing sector, President Obama will be able to reach out to the very people who have been most affected by the economic crisis.
President Obama was in Colorado yesterday to sign the new stimulus bill. At that press conference, he stated that the goals of the housing plan would target foreclosures on mortgage loans and declining home values to help responsible homeowners. The drop in values has affected homeowners in most areas of the country. One survey by Zillow demonstrated that of every six people who ownstheir homes, one is now in a situation of owning a home worth less than the mortgage on that home. The company approximates that in 2008 the housing sector lost $3.3 trillion. Shrinking home values make it more difficult for homeowners to refinance mortgage loans and sell their properties. Add that to the current glut of inventory of unsold homes due to foreclosures and tighter lending standards, and the housing market looks like a sinking ship. Most analysts anticipate that the housing relief proposal will encourage lenders to lower payments for customers whose mortgage loans are out of balance with their incomes. The plan will aim to reduce monthly payments on mortgage loans, rather than reduce the principal on properties. Making mortgages more affordable will also likely be another goal. That could be accomplished through opportunities to let homeowners hit by declining values undergo refinancing and through decreased interest rates for new mortgages.
The housing relief plan will not mean that everyone who is in trouble with their mortgage loans will get to keep their homes. The goal, however, is to lend a hand to those homeowners who have been responsible, which will then give a boost to the housing sector as a whole. History will be the judge of whether or not the plan will work.

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by: marciafreeman
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