Daily jobs report came out for August 2011 and to no surprise no new jobs were created. Currently, the nationwide unemployment rate stands at 9.2% and it seems there is no end in sight to this recession. So far in 2010, the number of individuals filing for bankruptcy has actually gone down. Many wonder if this is the calm before the storm. There are nearly 1.7 million homes in the nation that are currently in foreclosure. Banks own some of these homes and some will be taking possession in the near future. Credit card debt still is standing at record highs with most Americans having upwards of $20,000 per household. Many experts are predicting that in 2012 many people will be forced to file for bankruptcy just to restrain the creditors. Recently reported, credit card defaults were up 2.8% in July 2011. It seems that the handwriting is on the wall that many Americans will be filing bankruptcy in the next few years.
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Back in July, some housing economist's have been warning that a constant stream of home sales from foreclosures by banks will cause housing prices to continue to drop until the surplus is gone. One housing expert recently reported that he believed that there was somewhere in the neighborhood of 20 million homes in default and danger of foreclosure. These numbers seem a little bit extreme, but recent news makes me believe the possibility of this being true. Last month, Bank of America announced the plan to demolish 100 foreclosed homes in Ohio near Cleveland. Instead of selling these properties they took in foreclosure, they felt it was financially better for them to donate the property of the demolished homes to the local government. This makes me believe that there is an onslaught of homes that will be tough to sell that are in default. The last thing the bank wants to do is to have to keep a bunch of worthless homes on the books that could possibly drag down the rest of housing prices. Not only is B of A doing this but Wells Fargo, Fannie Mae and J.P. Morgan Chase have been selling at extremely low prices or donating these homes to local governments for the last couple years. It would almost be better for the banks to sell these homes for the same reduced prices to needy families that would have some kind of pride in ownership.
The Obama administration says it is working on new loan modification programs to help people that are facing foreclosure. The HAMP program was a complete failure with only about 3% of those who applied were helped with most of them losing their house to foreclosure anyways. Many of these folks also ended up having to file for bankruptcy because of the mess that was created while trying to qualify for a loan mod. I think whatever they come up with is going to seem great on the outward but be similar to the last one and again costing taxpayers millions of dollars. If the market gets flooded with a large number of properties from foreclosure, it's obvious that it will drag down the entire market and the economy. Trying to fix this thing is like pulling a Band-Aid off, you can rip it off and feel the pain for a short period of time or you can pull it off slowly like Chinese water torture and prolong this agony. The way the government is trying to fix the economy is not working. The government is regulating businesses into oblivion and you can bet there is going to be a lot more people filing bankruptcy in the next few years. The only good job that seems secure these days, is that of a bankruptcy attorney.
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