`Bailout Barney' Frank's Congress Refuses HBPA, and 750,000 Homes Are Repossessed
June 13, 2008 (EIRNS)Realty Trac's latest foreclosure report shows that the accelerating loss in American home "value" is causing a self-feeding disaster of mass loss of homes. Not only is it brutally clear that Treasury Secretary Hank Paulson's HOPE Now Alliance scheme has been swept away by the foreclosure tsunami. It is the U.S. Congress's refusal to enact a freeze on mortgages and foreclosuresa key part of Lyndon LaRouche's proposed Homeowners and Bank Protection Actwhich has turned the mortgage collapse into self-feeding spiral of economic destruction.
Nearly 74,000 homes were repossessed across the nation in May, meaning that since last October, homes are being lost to banks at a rate of 700,000 per year. Banks lending and servicing mortgages are holding, right now, more than 750,000 repossessed homes (1.5% of all homes which have, or had, mortgages outstanding). The pace of foreclosure actions by lenders and servicers is far higher, 3 million per year; so the repossession rate will keep rising.
Repossessed homes have come to dominate the home sales markets in the far West, upper Midwest, and parts of the Southeast where the mortgage meltdown is worst. A study released June 12 by two Lehman Brothers economists (they should know!) estimates that 30% of all home sales in the United States in 2008 will be of foreclosed homesand this alone will add -6% to the plunge in home prices, which has already reached -15% from the September 2006 peak.
The accelerating plunge in prices, reaching about 2%/month by the end of the first quarter, is in turn the main driver of more and more foreclosures, as households are trapped in homes worth increasingly less than the mortgage debt they owe on them, and have to get out.
"This is what you got when your Congressman did not support the HBPA," Lyndon LaRouche commented. "Barney Frank, take notice."