The Government’s Plan for Foreclosures

I wanted to start my next blog with a little more college basketball.  Amazingly I don’t have to travel next week and was hoping to see my Illinois Fighting Illini at Madison Square Garden in the NIT semifinals, but that didn’t pan out.  And last night I was disappointed to see Syracuse lose.  Leo Rautins, […]

I wanted to start my next blog with a little more college basketball.  Amazingly I don’t have to travel next week and was hoping to see my Illinois Fighting Illini at Madison Square Garden in the NIT semifinals, but that didn’t pan out.  And last night I was disappointed to see Syracuse lose.  Leo Rautins, the head coach of the Canadian National Team and dad of Syracuse’s star Andy Rautins, is speaking at a Coldwell Banker Real Estate Canadian event in Vancouver on April 8.  It would have been nice to have Leo with us smiling ear-to-ear having seen his son play in the Final Four.

Now that sports is out of the way, I wanted to turn my attention to a much more serious issue… foreclosures.  Today the Obama administration announced new plans to deal with foreclosures and a focus on those who are “underwater” with their mortgages.  This means that the their home is worth less today than what they owe.  The existing plan has not been very successful as I have commented on in speeches this year.  I am glad they have recognized that fact and have added some meat to their program to help those in danger of foreclosure.  Let’s all hope this enhanced plan works better than the current one.  There is a great article in the Wall Street Journal today that gives a nice overview of the plan’s details.

If you want to understand the implications of owing more than your house is worth, take a look at this article in USA Today.  Stephanie Armour, who does a great job covering housing, shared the situations of several Americans who have been impacted.

When you read an article like this and hear other sad stories of people losing their homes to foreclosure, you know the federal government has to keep working on the issue.

I feel so badly for people who are losing their homes.  It is absolutely horrible.  And the economic impact of these foreclosures continues to damper our economy.  Consider that according to the National Association of Realtors, these “distressed” properties sell for 15-20% less than a “traditional” existing home.  So in many parts of our great country, average prices are reflecting that downturn.  And clearly the sometimes severe price drops have a negative impact on so many different aspects of our economy.

Let’s hope that this new plan can help many, many Americans and at the same time help our country continue to move out of the recession.

Photo: Flickr user Seansie

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