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Another round of foreclosures to sweep the nation

Rep Barney Frank (D-Mass)
Rep Barney Frank (D-Mass)
House staff

Atlanta GA - Eventually the market will run out of homes to foreclose on. Or will it? The Whitehouse, or so it seems, has done nothing to improve the situation created, most experts agree, by not only loosening regulations during the Clinton era under the Community Reinvestment Act re-write but actually forcing financial institutions to make home loans available to a class of borrowers previously not able to qualify.

According to data from RealtyTrac foreclosure futures have jumped sharply for Q3 2011. Leading the charge is Massachusetts with an increase of 62% in default notifications. While not all notice of default services become foreclosures a jump of 62% is unprecidented in most states even since the rounds of failed TARP and related "rescue programs" designed to keep American home owners in their homes. A notice of default is sent as the first step in the foreclosure process and the mortgagor has an oppotunity to catch up their payments or work out a plan with the lender to restructure or otherwise avert foreclosure.

In a report based on the RealtyTrac numbers in Reuters the writer states, "Default notices were filed on 195,878 properties in the third quarter, jumping 14 percent from the previous quarter and the first increase in five quarters."

The Community Reinvestment Act required banks and lenders to open credit opportunities to prospective home owners who had lower qualifications in virtually all areas of credit worthiness normally required to be approved for a home loan. By authorizing Fannie Mae and Freddie Mac to purchase these loans, which would later be exposed as the toxic, poison pill to the American economy, and threatening banks and lenders with large fines for not complying, the Clinton administration under the direction of Representative Barney Frank (D-Mass) set the stage for the real estate and mortgage bubble of the mid 2000's. An article from 2008 in the Boston Globe provides knowledgeable details of the relationships.