Foreclosure Does Not Mean You Have To Lose Your Home
Part of the problem with the financial crisis we are in is home building has almost completely stopped. When you consider that during the Real Estate boom about 30% of the jobs created were in home and commercial construction and sales you can see this is a big problem. These people now have no opportunities for new jobs until the economy can start to support home building again. This is why the government is trying so hard to stabilize the housing market; if houses continue to decrease in value and families continue to lose their homes there is going to be no push to build new houses.
One way the government is trying to shore up the market is by giving foreclosure relief to families who have found themselves upside down with their mortgage. An upside down loan is very easy to understand. If you borrow $100 and use that money to buy an item then you have the item but you also have a loan for $100. Let’s say you now need to sell the item but you can only find a buyer who will pay $70 while you still owe the original $100. You are upside down by $30 because you still owe that much over what the item is worth on the market.
This happened over a million times during the last few years as families purchased homes at the top of the market cycle and then the value dropped out of the local Real Estate markets. Suddenly people owed thousands of dollars more on their homes than what they could sell them for. The foreclosure relief act is designed to help these people. Banks are offering lower interest rates and even foregoing some of the loan value in order to keep families in their homes. These banks are not doing this out of the goodness of their hearts, though, the government is backing this program.