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Paul Kiesel
Paul Kiesel
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Foreclosure Projections

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The Joint Economic Committee of Congress is predicting that two million families will lose their homes in two years, due to the current foreclosure crisis. On top of that, Credit Suisse predicts that by 2013, there will be about 6.5 million homes foreclosed.

With the economy continuing to struggle, unemployment rates touching record levels (5.5% currently, according to the Bureau of Labor Statistics ofthe US Department of Labor), and, whether every economist agrees with this or not, recession looming, it is likely that the current mortgage/foreclosure situation is just the beginning of the long road of economic hardships that many in this country will have to walk down and deal with over the coming 12 to 18 months.

Further proof: Prime borrowers have yet to have their interest rates reset on the Option ARM loans that they borrowed back in 2005 and 2006, another sign that a wave of foreclosures is just a “break” away (and the scores of foreclosures that will occur from this group of borrowers will also be more detrimental to the economy as these loans (Jumbo Option ARMs) were written for larger amounts ($417,000 +) than the subprime loans issued to subprime borrowers). Lehman Brothersposted losses today ($2.8 billion); an unfortunate indicator, considering the lack of media exposure surrounding it, that America is becoming more immune to seeing corporate giants lose significant sums of money. And to make matters worse for the burgeoning disenfranchised borrower, our government(particularly the White House) is very eager to help out the lenders of Wall Street, but when it comes to the families and middle-class Americans of Main Street, the best they can do is argue over what plan is best suited to alleviating the credit crunch (see Los Angeles Times article, 6/9/08); some members of congress have the right intentionby taking the position of helping borrowers, but good intentions and loud arguing isn’t going to solve the problem.

Do not wait for the White House or Congress to step in or expect them to come to an agreement on how to fix this problem anytime soon. It is crucial that any borrower facing foreclosure seek legal counsel or speak with their lender and see what options are going to be best for that particular borrower.