Housing Remains America’s Biggest Economic Problem

Is the only solution for banks to rewrite loan terms? Will their stockholders put up with this? Why penalize those who are keeping up with their mortgage payments?

The Telegraph of London says:

One recent report, from property research firm First American CoreLogic, estimates that at least 7.5m Americans are already in negative equity – owing more on their mortgage than their home is worth – with another 2.1m on the brink. MoodysEconomy.com estimates the negative equity figure could be as high as 12m.

More than 1m homeowners are already in the process of having their home foreclosed – or repossessed – by their mortgage lender, and a further 4m have missed at least one monthly mortgage payment.

In spite of these figures, the end does not seem to be in sight. Most economists agree that the US has yet to reach the nadir of its mortgage crisis, but until it does, the economy cannot really begin to turn the corner.

As Sheila Bair, chairman of the Federal Deposit Insurance Corporation, has stressed in recent days, a portion of the Treasury’s $700bn Troubled Assets Relief Programme (TARP) could be well used to assist those struggling to meet mortgage payments.

Her plan – which she continues to discuss with Treasury Secretary Hank Paulson – would see 3m homeowners given some assistance. The problem with such a scheme, however, is that it would be terribly divisive, leaving out millions of taxpayers who are having difficulties paying their mortgages – and yet will still contribute to the TARP fund through their taxes.

About Luke Ford

Raised a Seventh-Day Adventist at Avondale College in Australia, Luke Ford moved to California in 1977. He graduated from Placer High School in 1984, reported the news at KAHI/KHYL radio for three years, attended Sierra College and UCLA, was largely bedridden by Chronic Fatigue Syndrome for six years, and converted to Judaism in 1993. From 1997-2007, Luke made his living from blogging. Living by Beverly Hills (Alexander90210.com), he now teaches the Alexander Technique (moving the way the body likes to move). Lessons cost $100 each and last about 45 minutes. In 2011, Luke completed a three-year teaching course at the Alexander Training Institute of Los Angeles. His personal Alexander Technique website is Alexander90210.com. Luke is the author of five books, including: » The Producers: Profiles in Frustration » Yesterday’s News Tomorrow: Inside American Jewish Journalism
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