Real estate foreclosures in US have reached alarming proportions and causing concern to all sections of society and administration. The foreclosure is common in the mortgage industry but what is uncommon is the number of real estate foreclosures. Real estate foreclosures are causing a lot of mud slinging, accusations and counter accusations but as yet the forward march of real estate foreclosures has not stopped – rather real estate foreclosures have picked up speed.
The sub-prime mortgage is being primarily blamed for real estate foreclosures. Prime mortgage section has also seen real estate foreclosures but the bulk of real estate foreclosures come from the sub-prime group. The prime mortgage was available only to those with good credit history. The loan amount was related to the value of the house being mortgaged and the income of the borrowers. Since these stipulations left out a large chunk of the population, the sub-prime mortgage was introduced to help a good many number of people to realize their dreams of owning a house. Unfortunately the scheme has backfired and real estate foreclosures in huge numbers became the result.
The lenders went out of their way to woo gullible borrowers with teaser rates. This predatory lending has led to the spike in real estate foreclosures. Goaded by greed of commissions and investment prospects the lenders preyed on the vulnerable masses and created this crisis of real estate foreclosures. The borrowers coming from the weaker section of society were tempted with something they could not understand. The perpetrators of the real estate foreclosures have been compared to drug peddlers – luring the weak to a no-return situation.
Big cities like Cleveland and Baltimore are now suing giant banks for their complicity in the matter and charging them for being ‘public nuisances.’ Real estate foreclosures are creating havoc in society. Real estate foreclosures are also bringing down the prices of those houses not in foreclosure because the entire region becomes vitiated with crime. Taxes are not coming through because as per rules when a house is in foreclosure it is in a state of limbo and taxes do not have to be paid. The new owner at the time of purchase clears tax dues. Unfortunately there are few buyers in the market and the tax authorities are beginning to feel the pinch. Times are hard for all concerned – the victims and the prey as well as the killing fields.