Unemployment Adds To Foreclosure Fuel To Burn The Economy

Posted on November 10, 2008
Filed Under Foreclosure Homes | 1 Comment

Initially it was sub-prime mortgage that was the main reason for pushing people into home foreclosures. But lately unemployment adds to the foreclosure fuel to burn the economy.

For the last few years questionable loans and its subsequent fall out have caused house owners to slip into foreclosure. But now unemployment is giving the deathblow to the ordinary man in the street as the economy tanks. Today unemployment is the major factor for the economic slump.

Freddie Mac reported that in June 2008, 45.5% of all the delinquent loans were because of loss in earnings. It is an increase of 36.3% from 2006. Richard DeKaser of National City Corporation said, “These two economic factors that most contribute to foreclosures are falling home prices and rising unemployment. It’s hard t pay your mortgage when you don’t have a job.”

More people are finding themselves falling into this soup. In 2008 so far about one million Americans have lost their jobs. According to the Bureau of Labor Statistics in September 159,000 jobs in the private sector had been lost. It is apprehended that the report for October will be 200,000 job losses. Doug Duncan of Fannie Mae commented, “The rise in job losses will increase and extend the delinquency trend.” In September foreclosures increased by 71% defying all palliative measures.

One of the many sufferers is Chris Berio of Long Island, New York. He worked in two industrial units that have been badly hit by retrenchments. During the boom time in 2006 as a steamfitter he was confident and perky when he bought a unit of $350,000 in Deer Park. To finance it he took a mortgage of 11%. In 2007 he lost both his jobs – one after another with hardly a gap. He bemoaned, “I went from making good money to nothing.” A family man with two children he was lucky to get his mortgage modified in September this year with the interest rate being reduced to 5%. Today Berio, after managing to get another job, is a foreclosure prevention counselor.

Sal Pane of Amerimod Modification Agency said that the number of persons this non-profit body has been helping has tripled. Most of their clients are coming to them because of job losses forcing them to face foreclosure.

Nevada, Florida and Arizona together with California are one of the worst foreclosure hit states.

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