Your House Not Going Into Foreclosure Yet?

In the media, there has been a lot of news about foreclosures taking over the housing market and increasing in number. There have been many foreclosure abuse cases perpetrated by large financial institutions on Wall Street, such as the recent one between HSBC and federal regulators that occurred this past January.

To the regular homeowner who has a decent amount of equity and is paying off their mortgage, this may not seem like significant information. They’re doing fine so why should they have to worry about foreclosure? This is not true because foreclosures can greatly affect the housing market.

Here are some reasons why:

1. Home prices have recently risen, which is a positive trend. This has helped many people who owed more than their house was worth. But there are still many people, particularly in certain areas in California, who are still underwater on their home loans.

Unfortunately, these people are more likely than others to lose their homes to foreclosure. This can hurt neighborhoods because it drives average housing prices down. Fannie Mae and Freddie Mac are much less likely to give loans or change loan terms for people whom are struggling.

2. During the housing boom, people were buying up houses that they couldn’t afford under normal circumstances. Nowadays, many people find it harder than ever to find good mortgages or home loans because finding decent interest rates has become increasingly harder.

Fannie Mae and Freddie Mac no longer lend money as readily as they once did. These two companies used to help poor or middle class homeowners to find affordable homes.

3. Bank regulators are no longer looking out for the average consumers. Recently, mortgage companies were treating struggling homeowners unfairly and these regulators did nothing to stop it. Now, many houses have gone into foreclosures when they didn’t have to, which brings down the values of entire neighborhoods.