The enormity of the subprime debacle continues to unfold.

RealtyTrac - the pulse of foreclosure info - reports that in April, 243,000, or 1 of every 519 households across the country, were sent foreclosure notices. That’s 67% higher than April 2007, and a 4% increase over last month.

“It’s the highest monthly total we’ve seen since we began issuing the report in January 2005,” said a RealtyTrac spokesman.

Nevada, California, Arizona, and Florida were the worst hit. In Nevada, 1 of every 146 homes are being foreclosed on. In California, 1 of every 204. Some Metropolitan cities report rates as high as 1 in 66 households.

54,000 homes were fully repossessed in April, and 210,000 since the beginning of this year.

Because so many of these properties are being re-introduced into the market, selling prices remain depressed, with single family home values falling 7.7% since the first of the year.

CoreLogic, a company that “analyzes house price trends, foreclosure rates, economic health factors and fraud propensity to predict the chances that future mortgage delinquencies will occur, “predicts that foreclosures will continue to rise, and prices will continue to fall, over the next 6-12 months.

“Falling home prices have created a vicious cycle: Lower prices lead to more defaults, resulting in excess inventory, which causes demand to fall, bringing home prices even lower, leading to more defaults.”

Government Aid for Homeowners

As Lawmakers debate how to help, it seems George W. Bush has scooped them. An FHA plan was put in place by his administration last August called FHASecure. It provides a channel for subprime mortgage holders to refinance at a lower rate.

CNN reports:

“The Senate Banking Committee is set on Tuesday to consider a comprehensive bill to have the government insure up to $300 billion in loans. Last week, when key committee members were trying to work out their partisan differences, the FHA announced that it had helped 200,000 mortgage holders remain in their homes through FHASecure.”

A little more investigation revealed that of those 200,000 mortgages, only 3000 were actually going into foreclosure. The rest were given to homeowners making their payments whose subprime rates had not yet readjusted. That’s great for those with the foresight to refinance before their rate goes up. But what about all the munchkins who didn’t have the foresight?

More needs to be done, and fast. Hopefully, this week Congress, with Barney Frank leading the charge, will come up with some form of bipartisan agreement. A plan has been written, but the word is that Bush will veto it, favoring enhanced funding of his FHA Plan instead.

Do you think we should assist those being foreclosed on due to subprime shenanigans?

My opinion - these people are victims of a shark feeding frenzy that turned into a foreclosure frenzy (see my post on subprime history.) Somebody needs to come to their aide. But I would prefer that the somebody would be those companies responsible for its occurance rather than me and my tax dollars.

Why are these companies not being held accountable?

They botched one of the greatest of reachable American Dreams - home ownership.

John Mellencamp sings about the American Dream in his song, Pink Houses:

Related Posts

• July 25, 2008 -- Finally Some Relief for Struggling Home Owners (2)
• May 30, 2008 -- Revisiting the Buy vs Rent Question (3)
• April 14, 2008 -- When People Go Bad: A History of the Subprime Mess (12)