Last year we talked about how the (now failed) HAMP program and various foreclosure moratoriums were the only thing standing between homeowners and a second wave of foreclosures. Well, the time has come and that second wave of foreclosures is now upon us. Just in the first three months of 2010 more homes were lost to foreclosure than any other time since 2005. The number of homes taken in foreclosure skyrocketed 35 percent compared to the first quarter of 2009 and many analysts predict that we are well on our way to seeing over one million foreclosures in 2010 and that’s just in residential property.
There are two major causes right now for our high rate of foreclosures, 1) homeowners facing long-term unemployment and 2) banks refusal to modify the mortgages on homes that are clearly worth significantly less than the mortgage. These two factors are driving the foreclosure crisis and will continue to drive the foreclosure crisis unless our legislators get serious about forcing the hand of the mortgage industry. That is not likely to happen. We have already seen with the HAMP program how the government is skilled at wasting money on programs that only help a miniscule number of homeowners while lining the pockets of the mortgage industry. Why hasn’t the mortgage industry been penalized for the chaos it has caused in our economy? Why haven’t there been sanctions levied against companies who clearly issued toxic mortgages to many homeowners who clearly were unable to pay? And now that the band-aid that was slapped on the festering wound of foreclosures has peeled off, we are once again going to be hit with a tsunami of foreclosures. This will harm all of us, including the homeowner who is not in foreclosure by driving down their home’s value and littering their community with empty and eventually dilapidated homes that can’t be sold.