There are many interconnections in the current financial system. Investment firms receive foreclosures related mortgages and they are then resold as tools for financial risk. Funds of hedging and funds for pension can buy such tools, able to give high yield.
These assets have become very profitable, as the prices of the houses have increased. Nevertheless housing prices collapse as well as foreclosures have lead to sort of chain reaction. Standards have been raised by creditors, and there are loan payment problems among borrowers.
The Congress of the USA has issued a law through which the government can provide funds for important companies in the area of real estate mortgage, like Freddie Mac and Fannie Mae. They are willing to provide funds of about 300 billion USD in order to help the multitude of homeowners suffering because of the foreclosures crisis. This law has been approved, with 13 votes against and 72 for, by the US Senate, it has also been approved by the representatives and their House, and of course, it has expected for George W. Bush’s signature as a president.
There is an incredible number of homeowners unable to pay mortgages, in the USA. The price of the properties has declined and this situation triggered a widespread foreclosures crisis. The USA has not faced such a situation since the Great Depression. Freddie Mac and Fannie Mae have reported huge losses worth of billion dollars, caused by mortgage loans. Besides, the shares belonging to both companies faced important losses. Real estate experts consider that this law can balance this sector, but it will not finish the crisis.
More and more homeowners will lose their properties because they cannot pay their loans. These figures are estimated by reinvestment communities and groups of development. These 600 communities estimated that about 2.5 million people would face foreclosure. This law may be effective in general, but the loans sector crisis that affects the financial markets and America economy too may not be influenced positively, according to experts in real estate.
Because of withdrawal from private funds in the area of mortgage, Freddie Mac and Fannie Mae posses, or guarantee now, approximately half of American mortgages, representing about 13 trillion dollars.
According to this law, these huge financial companies may have temporary access to credit lines. The government may even purchase stock whether the evolution of the market requires it. The US Congress has decided as well to set up a fund worth of 300 billion USD, and the administration of the Federal Housing will help people and will refinance mortgages, which cannot be paid any more. About 400,000 families may benefit from some funds that are operational now. This law offers 4 billion USD in order to help people repair and buy foreclosed homes, auctioned homes and more communities can enjoy this law.
This law also decreases some charges for purchasing homes. It can set up offices for mortgage brokers licensing, and for loan-officers, and it can increase the mortgages limit, which may be promised by agencies.
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- Recommendations of the Task Force to Lower Foreclosures on September 25th, 2009
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- Rise in Foreclosure in Dallas-Forth Worth Area on March 4th, 2009
In contrary to most of the projections last year in the rise in foreclosure, in 2009 rates of foreclosed homes has started to wean out in Dallas-Fort Worth.
- You can Recover after a Foreclosure on March 27th, 2009
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- Foreclosure Plans on February 6th, 2009
According to the National Association of Properties in the United States, the market in .
