Obama Travels to Phoenix to Launch Foreclosure Plan

By: Joseph Smith


President Barack Obama is set to launch his foreclosure mitigation plan in Phoenix, Arizona, one of the most adversely affected by the foreclosure crisis in the U.S. The unloading of foreclosed properties into Phoenix's housing market has pushed down median home prices in the city from $262,000 in 2007 to $150,000 in the first months of 2009.

According to home foreclosure tracking firm RealtyTrac, the nationwide foreclosure rate increased by 81 percent between December 2007 and December 2008, with over 2.3 million homeowners given foreclosure notices in 2008. Notices of default, auction sale and repossession continued to rise in January 2009, increasing at a rate of 18 percent over January 2008.

RealtyTrac's vice president Rick Sharga said that the flood of foreclosures arose from big increases in monthly payments for borrowers that accepted high-risk mortgage loans and the steep decline in home prices that discouraged people from refinancing their houses.

President Obama is expected to allocate between $50,000 billion and $100,000 to rescue homeowners. Many economists and financial analysts believe that the president's foreclosure plan will focus on the reduction of monthly payments to lenders. This was the strategy long being advocated by Federal Deposit Insurance Corporation (FDIC) Chairperson Sheila Bair. At IndyMac Bank that she rescued from further losses, Bair reduced mortgage borrowers to a third of their gross income to enable them to keep their homes.

Treasury Secretary Timothy Geithner said the government needs to address the housing crisis in order to prevent crushing consequences on the economy. Jared Bernstein, economic advisor of Vice President Joe Biden, added that Obama's plan will prevent responsible homeowners from losing their homes to foreclosure.

However, there are many economists saying that the $50 to $100-billion funding will not solve the foreclosure crisis because of the depth of the problem. University of Maryland economist Peter Morici said that the $50 to $100 billion budget is so minuscule compared to the trillion dollars lost by borrowers and lenders in the housing sector.

Phillip Robinson could be right when he said the country is undergoing a payback period for the way Americans loosely used credit for homes, cars and all other things credit could acquire.

Even so, there are also economists that have praised President Obama for his efforts despite the perceived inadequacy of the plan. Anthony Sanders of Arizona State University said that the $50 billion budget for stopping foreclosures is a good start, although not enough.

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Joseph Smith has been educating buyers on the finer points of Government Foreclosures purchase at ForeclosureDeals.com for over ten years. Click here to visit and find more information on our Foreclosures.

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