The Foreclosure Crisis and the Response by Politicians on the Federal and Local Level

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Last week, there was a lot of talk about the fallout from the credit crisis caused by the meltdown in the housing market and plans to stop the rising foreclosure rates, but will anyone ever take action? As we all know, public officials, including Congress and the President, all like to talk about their "big plans" once they take office, but very few ever deliver.
Only time will tell if government offices have the ability to fix the problem, but if history has proven one thing, it's this: Be very skeptical of anything an elected official promises! In Chicago, Cook County Board President Todd Stroger is leading the efforts to impose a year long moratorium on foreclosures.
Stroger is gathering signatures, speaking at public engagements, and sponsoring workshops throughout Illinois to help foreclosure victims.
Entering 2008, Chicagoland foreclosure rates were at an all time high, but home sales are beginning to turn around and foreclosure rates are beginning to flatten out.
Home sales are up 25% which will help the overall economy, but home values are still decreasing in many areas, indicating the market still has a way to go before supply and demand corrects.
Overall home appraisals within the city of Chicago are down over 5% from last year.
Michigan activists and public officials are joining together this week in Lansing to march in a parade to halt foreclosures for up to two years.
Michigan is one of the hardest hit states when it comes to foreclosure and decreased property values.
The state senate bill protects homeowners for a period of 6-24 months, while giving would-be foreclosure victims a chance to get back on their feet.
Michigan foreclosure rates were up 27% from last year, which is actually an improvement from previous periods.
Foreclosure rates throughout Michigan were up over 100% in previous months! Michigan is still easily one of the top 10 states for foreclosure filings, but rates are finally significantly decreasing, although this market was also artificially pumped full of easy money, driving up prices to unsustainable levels.
On a recent weekend, September 7th to be exact, the government officially took over the mortgage giants Fannie Mae and Freddie Mac.
Both of these organizations were created by the government and Fannie Mae was previously run by the government, so their takeover comes as not really much of a surprise.
By taking back these organizations, the government hopes to provide stabilization throughout the financial system and the economy as a whole by showing that the US government will stand behind troubled private lenders and mortgage guarantors and continue to focus on providing low cost mortgages to home buyers throughout the US.
The end result of this "conservatorship" will probably be the American tax payers bearing the brunt of the foreclosure crisis, to the tune of at least $200 billion, although Fannie and Freddie guarantee about half of the $9 trillion American mortgage market.
Senators nationwide are asking the newly appointed Chief Executives of Fannie Mae and Freddie Mac to temporarily put foreclosure proceedings on hold across the country to allow local governments and homeowners to find other options to stop foreclosure.
Finding solutions will mean that taxpayers are not on the hook to make up losses due to foreclosures.
While foreclosures in many states such as Nevada, California, and Arizona still seem to be increasing, other states like Tennessee and Idaho are leveling off.
Based on 2007 foreclosure rates, Tennessee rates are nearly identical this year.
This may represent an improvement, but the state still has 13th highest rates, with over 1 in 600 homes in some stage of foreclosure.
Nationwide, about 1 in 400 homes have received some type of notice indicating they are in default of their mortgages.
The top ten states in foreclosure rates were Nevada, California, Arizona, Florida, Michigan, Georgia, Ohio, Colorado, Illinois and Indiana, in that order, although Michigan, Georgia, Ohio and Colorado all reported rate decreases and may soon find themselves dropping from the dreaded top 10 list.
Despite the help offered by most government plans, foreclosure rates across the nation have increased at their own pace and may now be finally starting to level out in some areas.
The fact that this is happening just as the financial system goes into crisis and the Federal Reserve and US Treasury are stepping in to take over private companies indicates a lag time between when the crisis hit Main Street and when the consequence are felt on Wall Street.
It also indicates how misguided it is to trust in government programs which are proposed to fix problems now, but do not take effect for months, thereby always attacking problems inefficiently and after the fact.
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