Although the housing market is showing signs of recovery, other indicators show the foreclosure crisis is getting worse. In a September interview with U.S. News, Austan Goolsbee, the former chairman of the Council of Economic Advisers, said, "I think there's a lot wrong in the housing market. If Fannie and Freddie would start enabling people to rent out the vacant homes, that would also help."
Pull and Tug in Congress. President Barack Obama is planning to bring on a mortgage refinancing plan, which may help alleviate the foreclosure crisis. It’s aimed mainly the working and the middle class to equip them with better mortgage management. Obama has said that, though the housing market has been recovering, it is going "to take a while for our housing market to fully recover." He has also claimed that the refinance plan, which he is urging Congress to pass, would help responsible homeowners to save at least around $3,000 per year simply through refinancing their homes at low interest rates. This in return may help with the recovery of the economic situation of the nation. It can also potentially help improve the job market. Yet market watchers aren’t feeling confident the plan will get passed by Congress.
The issue derives from the fact that the foreclosure problem has ballooned to the point that even home-mortgage modification programs are proving to be falling short. The Federal Housing Finance Agency, under the supervision of mortgage giants Fannie Mae and Freddie Mac, introduced a pilot program at the beginning of this year aimed at helping the foreclosed homes, but it appears to lack efficacy.
The mortgage foreclosure crisis is weighing heavily not only on the minds of homeowners who may have just started a family but on the minds of people thinking about retirement. As home values depreciate, financial assets are folks nearing retirement take a hit.
Additionally, multiple factors are exacerbating the problems for homeowners, one of the largest of which is the home equity issue. After the housing crisis and the recession, home equities dipped even more, pushing a large number of homeowners toward the edge of foreclosure. This is contributing to worsening issues with regards to the real estate market. In general, the value of a home risse with the passage of time, which serves as the biggest form of savings for homeowners. When it doesn’t happen, the people planning to secure their retirement may lose confidence in retiring happily.
Another problem is affordability. Brandon Moore, CEO of RealtyTrac, said in a July interview with U.S. News that "40 million Americans choose to pay a mortgage every month and even if just a small fraction of those choose not to do so, things can compound and get much worse pretty quickly." So even if the financial situations of some people have improved, it may not prove to be helpful enough for the housing market as a whole.
More than 12 million Americans are stuck with underwater mortgages. Although the majority of these people are still making their minimum monthly payments, there are strong chances that these homeowners are going to run into serious trouble.
Selena Cowell is associated mainly with the MortgageFit Community and has contributed to a number of other financial websites. She has written articles on how foreclosure can be stalled, mortgage loan modification, types of mortgage loans, taking out the right mortgage, real estate investment, and short sale and home-loan related issues.