Your home equity is in trouble this time and will remain so in the coming months.
Home foreclosures in the United States are still growing in number with Nevada, Arizona and Florida recording the hardest hits in October, according to the latest statistics by RealtyTrac, an online company catering to foreclosed homes.
In October, the nation recorded 279,561 foreclosed homes, up by 25 percent from the previous year. Houses also lost their value for the seventh straight month, falling 9.7 percent from last year at this time.
With recent news about job cuts by Citigroup and a host of other companies likely to follow suit, these numbers are not expected to get better in the coming months. More layoffs translate to more homeowners forced to sell their homes. A bigger supply of homes means lower prices for houses overall in the country.
Home values lost more ground when Lehman Brothers failed to restructure its subprime offerings. The investment bank’s downfall brought speculation in the markets that mired the ailing economy even more. Not only did it bring down single-family home prices but also high-end luxury homes as well.
Methods to improve the affordability of houses and rescue those in trouble are crucial in an inflated market. A look at some possible solutions:
• The Federal Housing Finance Agency, Citigroup, IndyMac Bank, Bank of America and JPMorgan Chase have all restructured existing loans to bring down foreclosure rates.
• Some states have passed laws that can modify mortgages to pull homeowners out of the mess.
• President-elect Barack Obama’s plan of allowing bankruptcy courts to modify mortgages is still in the works until he formally steps in the office.
What we also need is another program for those most likely to be on the brink of foreclosures – the recently laid off workers and those who are still in hard-hit industries like finance and manufacturing. Safeguarding those in the trenches of the company is another venue for cutting down foreclosures and slowing its rate eventually.