if the current nationwide foreclosure rate continues & the banks own all the homes how will it affect the usa?

Question

Will this destroy the economy and will there no longer be any middle class just rich or poor ?

Answer 1

Your question is extremely flawed.

The banks that foreclose on you dont own the homes. They just collect the payments for those that do.

There is no bank that is rich enough to use their own money to finance the mortgage market. The subprime market you are thinking about, that is all going to hell. The reason the banks are going out of business and foreclosing is because they guaranteed against loss.

When a bank takes a loan they package it and turn around and sell it. Countries, hedge funds, insurance companies all buy these "mortgage backed securities". When one foreclose the above mentioned people go back to Countrywide and said you guaranteed it wouldnt foreclose buy it back.

The average foreclosure rate is 1-2% When it hits 3% and the banks were planning on 1-2% they dont have the money to buy back 3%. They are out of money. They set aside 30 billion for foreclosures and it was 60 Billion in losses. They cant buy them back. Thats what you are seeing right now.

They have to pay back the Countries, Hedgefunds, Insurance companies that put up the money. And they are out of money. They bet that they wouldnt have this many foreclosures.

The were wrong. They are overextended and cant pay the money back.

Now it wont destroy the middle class. Its only hurting a very few amount of people. But a shift of 1-2% of the foreclosure market can kill banks. As the other poster said, its not affecting 98% of the nation. Other then their values of their property will go down short term. When I say short term, maybe 12-24 months.

Answer 2

If the banks owned ALL the homes...... hmmm...,. No. Not only the middle class would be hurt. About 99.9999999% of the people in the USA would become poor. Imagine, 100% would be homeless!!! Even Donald Trump would be reduced to a mere tenant! Crime would go thru the roof. Suicide rates would escalate. People would be burning cars and flipping houses..... uh, switch that. Quakers would need to sleep in barns. (at least they know how to build one - I'd be under a bridge somewhere)

It would be a pretty bad situation. Soooooo, everybody start making your mortgage payments again, so the banks won't own ALL the houses. Whew! That could have been worse than global warming!

Answer 3

None of that could happen. It finally made the news today on an intelligent network that 98.7% of the homes in America are not in forclosure. You just hear about the 1.3% because the media can get everyone in a frenzy and make some money. Hope this helps. There will always be a middle class BTW.

Answer 4

What a very uneducated question.

As unbelievable as it sounds there are millions of RESPONSIBLE people who manage to make their mortgage payments and meet their monthly obligations just fine.

They did it by buying what they could afford and stay away from fancy financing that led to the mess we have with SUBPRIME loans.

It is those that think the world owes them something or they are entitled to this. that or the other that are in trouble right now.

Have some people been duped? You betcha'. But the majority went in with their eyes wide open and figured tomorrow would take care of itself. Well it won't with that kind of attitude!