Do you believe we are being told the truth about the severity of the foreclosure crisis?
According to our government, an estimated 2.5 million foreclosures were completed from 2007 thru 2009, and an estimated 5.7 million foreclosures are imminent. As a result, a total of 8.2 million homes will eventually be lost to foreclosure.
Our government’s estimate of 8.2 million anticipated foreclosures is based on the number of homeowners who have either defaulted on their mortgage payments, or homeowners who are currently having difficulty making their payments.
But ironically, homeowners “currently having difficulty making their payments”, include only those who have fallen delinquent on their payments. Not included are 43% of American households who currently spend more than they earn each year.
If someone is spending more than they earn, what are the chances they are having difficulty making their payments? Logic tells us that they will eventually fall delinquent on their payments when they are no longer able to borrow money, or when their savings become depleted, unless they experience an increase in income.
How likely is it that Americans, currently spending more than they earn, will experience an increase in income in the near future?
According to our government, the number of American households that spends more they earn each year has increased from 38% to 43% in the past two years. A recent report by the U.S. Census Bureau indicates that since 2007, the year before the most recent recession, real median household income has declined 6.4 percent and it is expected to continue declining.
While income is declining, debt is increasing. The average credit card debt per household has increased from $5,000 to more than $14,000 in the past six years.
Assuming this trend of declining income and increasing debt continues, the 43% of American households currently spending more than they earn each year, will eventually fall delinquent on payment of their mortgages, which will result in 48 million foreclosures (43% of 112 million households), as opposed to our government’s estimate of 8.2 million.
With nearly one half of American households in jeopardy of foreclosure, surely our government is doing everything possible to assist homeowners in saving our homes from foreclosure?
Two weeks ago, President Obama announced a revision to the Home Affordable Refinance Program (HARP) that would “allow many more struggling borrowers to refinance their mortgages at today’s ultra-low rates, reducing payments for some homeowners . . . “
Is it fair to ask how many are “some homeowners”?
The answer is less than four percent of homeowners. During his speech, our President did not reveal that, even with the new guidelines, HARP is incapable, that’s NOT capable, of reaching more than four percent of homeowners.
And the same is true of every single program, federal or state, that has allegedly been made available to distressed homeowners as related to the foreclosure crises. All have cost taxpayers dearly while helping few people save their homes.
For example, the Making Home Affordable program (HAMP), birthed in February 2009, cost taxpayers $75 billion. Just over one million households (out of 112 million) have qualified for HAMP. As of July of this year, almost one half of participants had dropped out of the program.
Why does our government continue to spend their time and taxpayers money on programs designed to keep so few Americans in their homes?
For insight into this issue, see the Washington Post article outlining President Obama’s recent announcement of revisions to the Home Affordable Refinance Program.
I encourage you to not only read the article, but also the captions at the bottom of each of the photographs. The article can be accessed by clicking on this link: http://www.washingtonpost.com/business/economy/the-home-affordable-refinance-program-harp-what-you-need-to-know/2011/10/24/gIQAXFDUDM_story.html
NOTE: The banner advertising President Obama’s 2012 election campaign has been removed since my mention of it during my radio show last week.Published by carterharkins and tagged with: Tags: foreclosure crisis, HAMP, mortgage relief | No Comments