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Mayors Predict Rising Foreclosures in 2008

Mounting home foreclosures will lead to “profound” effects on the economy next year, bleeding billions of dollars in lost tax revenues, shrinking job growth and reducing consumer spending in the nation’s major metropolitan areas, according to a new report released this week by the U.S. Conference of Mayors.

Prepared by forecasting and consulting firm Global Insight, the report said weak residential investment, lower spending and income in the construction industry and curtailed consumer spending because of falling home values will combine to hold back the nation’s economic activity.

The study said at least 1.4 million homes will enter foreclosure next year. That will worsen the already sharp housing downturn, with ripple effects on hiring and spending. Overall, businesses will create 524,000 fewer jobs next year. Tax receipts will fall by $6.6 billion in 10 select states. Nearly 130 cities around the country will face sluggish growth, as economic activity expansion is reduced by more than a third in 65 metro areas alone, the report predicts.

Moreover, the report projected big economic losses in some of the nation’s largest cities. New York, for example, is expected to lose $10.4 billion in economic activity in 2008, followed by Los Angeles at $8.3 billion, Dallas and Washington at $4 billion each, and Chicago at $3.9 billion.

What can be done about the growing foreclosure crisis? Tell us what you think.

Posted: Thu, November 29 2007 7:46 AM by Octavion

Comments

Octavion said:

Bob: That's a good suggestion.

Converting adjustable rate loans into fixed rate loans is a good idea. At least that way, the homeowners know what their monthly payment will be.
# November 30, 2007 3:42 PM

Octavion said:

Sheri:

 I agree with you. Lenders should be more flexible with consumers. I hear that a lot of homeowners in foreclosure have a hard time finding out who to speak with at the lending institutions. Have you heard that too?
# November 30, 2007 3:48 PM

T.C. said:

Thinking that this whole thing is a no-brainer. Presidents Bush's plan isn't going to help many people because it is geared at people who cannot afford the payments due to the rate increase but listen to this, what about the part of the plan that says that you have to have good credit???

If a person has good credit that can take out a loan to keep up the payments and they are not going to tarnish their credit like that. Ok a families income doesn't change with the interest hike, but if their payments increase say $300 that is $300 that is going to be decreased from family spending (entertainment etc.) less driving and use public transportation.

You have to do what you have to but people with good credit will find a way and don't need the help of the government.

www.foreclosure-reference.com
# December 20, 2007 11:22 AM
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