Economy is still weak due to the moment and foreclosure

According to RealtyTrac, 3.9 million foreclosure notices have been sent to Americans. This will mark record filings for the 2nd year in a row. In 2009, the number of filings will surpass the number of 2008. That is primarily because of unemployment. Even price of houses have eroded, which is a major factor plaguing the house market.

Recovery of the housing market will take a long time. This was observed by expert economist John Quigley. He observes that there will not be any improvement until unemployment has attained the peak level. In November 2009, foreclosure filings exceeded 300,000 for the ninth month in a row.

The Federal Reserve Chairman Ben S. Bernanke said that the labor market is weak and there is credit crunch – primary factors that are driving the economy.

As many as 7.2 million jobs have been lost since 2007. This is the record level of any post-war slump. Quigley observes that the unemployment is at the level of 10 per cent. It will not reach the peak before the first half of 2010.

The Federal government had come up with a plan to prevent foreclosures. As part of the plan, loans of borrowers will be modified on a temporary basis, initially and then after three months, when they have paid the revised mortgage, the loan will be modified on a permanent basis. The Obama administration had ordained that loans of 4 million people should have been modified but the lenders had been able to modify loans of only 31,000 people. That is not even 5 per cent of the eligible mortgage.

According to RealtyTrac CEO, James Saccacio, the pace of foreclosures has slowed down because government has extended the deadline of tax credit for first-time buyers to 2010. The loan-revision programs have also put the lid on property seizures.

Foreclosure filings fell by 15 per cent from the peak in July and also 8 per cent when compared to that of October. A sum of 306,627 houses received default notices. That means one in 417 homes received foreclosure filings. From January to November, the total number of foreclosure filings reached 3.6 million. This is the maximum number since January 2005.

The Lender Processing Services report says that three mortgages went bad for one that registered an improvement. The foreclosure rate went up to 12.6 per cent. Less than 1.5 million property owners were eligible for the Home Affordable Modification Program of Obama.

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