Treasury: Expect Millions More Foreclosures

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Despite efforts to prop up the housing market, as many as six million Americans remain at risk of foreclosure over the next three years.

While the Treasury is struggling to help homeowners and banks modify mortgages in order to prevent foreclosure, the program has been off to a slow start and  millions of people might lose their homes regardless.

MakingHomesAffordable.gov: Even if HAMP [The Home Affordable Mortgage Program] is a total success, we should still expect millions of foreclosures, as President Obama noted when he launched the program in February.

Some of these foreclosures will result from borrowers who, as investors, do not qualify for the program. Others will occur because borrowers do not respond to our outreach. Still others will be the product of borrowers who bought homes well beyond what they could afford and so would be unable to make the monthly payment even on a modified loan.

Given that loan modifications are unlikely to prevent large amounts of future foreclosures, expect further government intervention to prop up housing prices. After all, the Treasury said in this latest release that a strong housing market is “crucial” to a US economic recovery. A strong fiscal position, presumably, isn’t.

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