At the end of September I read an article about the impact of this recession on the people in the United States.
Middle Income and Poorest Families Hardest Hit
The article reported that the middle income and poorest families have been hardest hit by the recession. It went on to say that the gap between the richest and poorest Americans has widened.
10% of Americans make more than $138,000 a year. Their income is almost 11.5 times higher than those who are at the poverty line and earn about $12,000 a year. That gap has increased since 2007. In 2008 median income was $50,303. That is the lowest it has been since 1997. 13.2% of the people in this country are at the poverty level. That is also an 11 year high.
While the incomes of the richest people may have been reduced, most have kept their jobs. The impact of the recession has not been as severe on them as it has been on the middle class and the poor. Many in the middle class and many of the poor have lost their jobs. They have remained out of work for long periods of time. Frequently those unemployed in the middle class have been forced to take jobs paying far less than they had been making previously. The poorest have been hit the hardest. They have the greatest difficulty finding work and are really struggling to get by.
What Impact has the Recession Had on Foreclosures?
We know that the recession has led to a dramatic increase in the number of foreclosures. I have yet to seen any type of study on the number of foreclosures by income bracket. I assume that if one were done, it would track the findings that were reported in the article I just talked about.
I assume that the largest concentration of people facing foreclosure is the poor people in America – those who are suffering the most in this recession. I also assume that the next highest concentration is among the middle class especially those who have lost their jobs and cannot find jobs paying what they had been earning previously. The people probably least affected are the wealthy – those earning more than $138,000 a year. While their incomes may have dropped, job loss is less frequent. They probably have more than enough in savings to tide them over until this recession ends.
Isn’t It Sad
that those affected most by foreclosure are probably those who can afford it the least? Just imagine the impact on them and their families. One of the leading causes of divorce in this country is a financial challenge. A foreclosure has to magnify that. A foreclosure has to have a devastating impact on the mental health of not only the parents but also the children. Many will carry those mental health scars through their lives. When they are adults, they may never realize how these scars developed.
We Need to Get Mortgage Companies to Act
The performance of the mortgage companies in approving people for trial loan modifications in the Making Home Affordable Modification Program is horrible. In the first seven months of the program mortgage companies have approved trial modifications for only 16% of the estimated total number of people who are eligible for them. They should be penalized for their lousy job. From what I have read, states are responsible for legislation dealing with foreclosures. So if mortgage companies are to be penalized for not helping people facing foreclosure, each individual state would have to do it.
Contact your elected state officials and ask them to get involved. In addition to contacting your state representative and senator, contact the attorney general of your state. Express your displeasure with what is happening and demand that they require the mortgage companies to act faster in approving people for trial modifications. Demand that they penalize mortgage companies that don’t. Suggest that they consider barring any mortgage company that does not take steps to improve from doing business in your state.
We Need A Groundswell of Public Opinion
The reason we have seen a lack of action in the various states to hold the mortgage companies accountable is these companies have powerful lobbyists. These lobbyists have worked to defeat or modify any legislation proposed which would require mortgage companies to really help people facing foreclosure. The only way for us to defeat them is to get the message out to all of our neighbors. We have to make them understand how the mortgage companies are hurting people facing foreclosure. Over and over again I have seen instances where public outcries have led states to take corrective action.
If you are facing foreclosure, do all you can to save your home. Start by learning all you can about the foreclosure process. Then study what steps you can take to get your mortgage company to modify your loan. You might want to check out my EBook on this. You can get more information on it by clicking Stop Foreclosure.
Much Success,
Mark Elkins
