Due to unemployment, foreclosures are rising a lot

Unemployment and not sub-prime mortgages is pushing up this new wave of foreclosures. House owners generally get 60% of their value from the equity on the property. Surrendering a house to foreclosure indicates the dire financial condition of the family or individual. The situation is poised to worsen with more foreclosure ready to hit the market. The numbers of foreclosure are indicative of the health of the economy – whether of individuals or of the nation.

When the housing bubble burst the economy soon slipped into deep recession. Foreclosures began to spike and these continue apace. In the third quarter of 2009 foreclosures in USA shot up by 5% from the previous second quarter and by 22% from what it was one year ago as per the findings of RealtyTrac.

Foreclosures have picked up again in New Jersey after a short respite in the first part of the year. In Atlantic County foreclosures have gone up by 33% in comparison to the second quarter but only 9% more than the third quarter of 2008. In Cape May County foreclosures have gone up by 30% but remains unchanged from what it was a year ago. In Cumberland the increase is 35% from the previous second quarter but 6% decrease from what it was one year previously.

In general the figures indicate a worsening of the situation after a short respite. Previously foreclosures were triggered by defaults in dubitable mortgages and dropping real estate market. But with the continuation of the recession the unemployment rate is alarming and this seems to be the main reason behind this new set of foreclosures.

Howard DeRias of Sellstate Innovative Reality in Northfield said that while working he is coming up against job losses and foreclosures increasingly. He said, “The economy is continuing to lag, there’s no job creation and a lot of people are having to work part time instead of full time. I’m hearing from people, ‘I lost my job’ or ‘I lost my hours, and now I can’t keep up with the payments.’ Or maybe the spouse lost a job. It’s heart-rending, heartbreaking.”

Even those with prime mortgages are now facing foreclosure as they have lost jobs. DeRias opined that behind foreclosures the nearly prime mortgages and ARM’s are having a big hand. This is especially with the worth of the properties having plummeted to below the loan amount.

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