Since the housing bubble burst, millions of families have been foreclosed upon and millions more have seen their mortgages sink underwater (meaning they now owe more on their mortgage than their house is worth), through no fault of their own. Continued foreclosure have been a drag on the economy for the last few years, pulling down home values and blighting neighborhoods.
The Obama administration has tried to implement anti-foreclosure programs (with extremely limited success). But according to the U.S. Chamber of Commerce, these efforts should come to an end, as the economy actually needs more foreclosures:
On the housing front, [U.S. Chamber of Commerce President Tom] Donohue struck a somewhat dire tone, arguing that more foreclosures need to occur before the housing market can turn around, and criticizing Washington efforts to provide relief.
“Through their actions over the last two decades, the politicians have already proved they can help royally mess up the housing sector,” he said. “Government should be smarter this time around and avoid the temptation to endlessly prop up those who, sadly, will never be able to afford the homes they are in now.”
Currently, one in five homeowners in the U.S. is underwater. At the current rate, it would take 103 months to “sell off all the foreclosed homes in banks’ possession, plus all the homes likely to end up there over the next couple years, at the current rate of sales.” That’s eight and a half years of backlog. Wall Street is not maintaining the properties it already owns, further dragging down the value of homes. More foreclosures and empty houses will do nothing to help the situation.
The Wall Street Journal reported this morning that “the Obama administration is ramping up talks on how to revive the housing market,” but has not decided on any specifics. Last week, President Obama hinted that the White House is working on ways to apply more pressure on banks, pushing them to reduce loan amounts for troubled borrowers.
The Chamber of Commerce, however, as it stands up for the nation’s biggest banks and multinational corporations, thinks it best that homeowners simply lose their homes. According to a new CBS/New York Times poll, “53 percent say the federal government should be helping people who are having trouble paying their mortgages.”