Millions of Homeowners Still Delinquent on Mortgages
According to popular belief the economic recession is over, but economists are still searching for signs that the economy is gaining traction and on the road to recovery. Perhaps the most telling sign is that home values are still declining, and experts are now predicting a slow, 5-year crawl back to pre-financial crisis levels, rather than dramatic improvement.
The housing market is still in shambles due to the glut of foreclosure homes on the market. With homes available at such bargain prices, buyers are not interested in new homes, thus affecting the construction and real estate industries.
Since the beginning of the housing crisis over 7 million homes have been foreclosed on. The bleakest news of all is that another 7 million foreclosures are expected over the next 5 years.
In the meanwhile, over 4 million foreclosure cases have been referred to lawyers, but with so many cases already filtering through the legal system it is taking an average of 565 days to foreclose on properties. In
Florida (the state hit the hardest by foreclosures) the average is 807 days - a time span of over two years! For homeowners who fight eviction, the process can drag on even longer.
It is estimated that over 2.5 million of these homeowners have not made a
mortgage payment in over a year, and over 1.5 million haven't made a payment on their home loan in over two years - yet, they remain in their homes.
Many of these homeowners are trapped in upside-down mortgages, where they owe more on their mortgage than the overall value of their home.
The
Federal Reserve is working on policies to prevent evictions, foster job growth and stimulate the economy, but results have been inconsistent.
While the market is flooded with vacant foreclosure homes property values will remain low. While costs are low, the credit and banking crises have forced banks to stiffen their lending practices.
The only foreseeable solution to the problem is through lowering the unemployment rate.
By: Javi Calderon
