Land foreclosures have spiked in recent months across the United States of America due to circumstances beyond the control of most property owners; these include the downward trend of the United States economy, the erratic behavior of the stock market, higher interest rates that banks have placed on loans and mortgages, and a sudden upturn in unemployment numbers. All of these circumstances have combined to create a perfect storm of foreclosure proceedings that have left many into tough financial waters.
Since 2007 bank foreclosures have risen by one hundred and eleven percent. Almost half a million individual foreclosure and pre-foreclosure proceedings have been initiated by banks or other lending institutions and the numbers continue to grow and escalate. The number one reason that these numbers have seen a dramatic increase has been the sudden decline of the United States’ economy. After enjoying record increases over the last six or seven years that saw the stock market climb to record heights the market suddenly and unexpectedly collapsed. This collapse caused hundreds of thousands of individual investors to lose their life savings. This meant that they could no longer afford to pay their accumulated debt thereby forcing banks and other lending institutions to begin their spiraling rise in land foreclosures.
Since the sudden downturn in the United States’ economy, the stock market has not only ceased its predictable upward trend, but has become volatile – making dramatic moves upward and downward almost without prediction. This climate makes it hard for investors to predict what stocks will increase or decrease in value which therefore makes it hard for investors to know what to invest in and what not to invest in. This means that it is harder for investors to make money. When investors have hard times making money off of the stock market, they have a hard time paying their bills which leads more foreclosures.
Since banks have had to call in a lot of bad loans, they have found that many debtors or mortgage holders have been unwilling or unable to repay the extended loans. This has led to a cash crunch in which the banks have found themselves short of the daily funds needed to complete financial transactions. Banks are therefore less likely to lend money. This has led to an increase in interest rates related to mortgages or other types of loans. These higher interest rates have forced hundreds of thousands of property owners into financial straits and led to an increase in the total number of foreclosed properties.
Finally, a downturn in the United States economy not only means that investors are less likely to make money and that banks are less likely to loan money, but that the average person has a greater risk of becoming unemployed. Unemployment is the number one reason people site as a reason for being unable to repay loans or mortgages. The unemployment percentage in this country has spiked to over seven percent in recent months. This is the highest figure in fifty years. This means that these unemployed people will now be unable to repay any accumulated debt they may have incurred when times were good; thus, leading to more land foreclosures.
For all of these reasons, foreclosures have risen dramatically and are likely to continue their increase as long as the economy continues to sputter.
