28 April 2006

Foreclosures on the Rise as Housing Market Nears Collapse

Like a balloon slowly leaking air, the housing bubble created by the Federal Reserve following the dot-com collapse continues its slow seepage into the ground, where it will bury Uncle Sam's working class. Bloomberg reports:
Mortgages entering foreclosure jumped 72 percent during the first quarter from a year earlier, as higher interest rates increased monthly payments and strained the budgets of homeowners with adjustable-rate loans.

Lenders began foreclosing on 323,102 mortgages, a ratio of one in 358 U.S. households, according to a report issued Monday by RealtyTrac Inc. Banks typically start foreclosing on mortgages after payments are 90 days late.
One of the ways in which Uncle Sam created the housing bubble was through high-risk money lending schemes aimed at convincing working class-people to "buy" a home. "No money down" schemes, home equity loans, and variable rate mortgages all came about as a way of doling out cheap money. The fallout from such easy-money schemes for working people is that, when interest rates rise, mortgage payments do, too.

And it is those more expensive loan payments, coupled with a decline in the real wages of working class people, that will cause Uncle Sam's housing crisis to intensify.

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