US Homeowners Still Late on Payments Despite Gov't Aid on Loan Terms
There still remains plenty of reason for concern about rising foreclosures in 2010 and 2011. This year the Obama administration launched the $75 billion taxpayer-financed Home Affordable Modification Program to help reduce foreclosures. The program provides up to four million US homeowners with loan modifications intended to lower monthly payments or reduce principal on mortgages. However, like the majority of the government bailout and stimulus schemes it’s not working out very well. Reuters has reported that about 27 percent of the homeowners taking part in the program are delinquent on the mortgage payments.
And, according to the Times Online:
“‘The housing crash is not over,’ [Mark Zandi, chief economist at Moody’s Economy.com] said. He expects the Case-Shiller index to reach the bottom in the third quarter of next year, after declining by 38 per cent.
“With almost a quarter of American homeowners in negative equity, with unemployment running at 10 per cent and with annual retail sales growth in November disappointing at 0.7 per cent, the case for a sustained recovery is already a shaky one. Mr. Zandi expects the number of foreclosures between 2006 and 2011 to reach 7.5 million, with the majority of these occurring between this year and 2011.
“The cost to American banks of these residential property loan losses in 2008, 2009 and 2010 is estimated by Moody’s to be $247 billion, equal to 12 per cent of mortgages outstanding at December 31, 2007.”
More information on the homeowner bailout plan is available from The Times Online in its coverage of how it’s failing to stop the US housing market crash.