Even after significant reorganizations under chapter 11 bankruptcy earlier in the decade, the airline industry is once again in the news as several carriers show an increasing risk of default and bankruptcy. The looming problems, which have already resulted in layoffs, are expected to deteriorate as consumer demand continues to decline, the price of jet fuel soars, and the U.S. economy moves steadily closer to a recession.
Cases of bankruptcy nearly doubled in the first quarter of 2008 compared to the same period in 2007. This clearly demonstrates the widespread financial strain in the United States and the urgent need for relief and government intervention. Recent Democratic efforts to pass a bill that would adjust existing mortgage loan amounts to more accurately reflect current fair market value were rejected by Republicans and the banking industry due to the projected losses banks would have to absorb, leaving homeowners waiting for a solution to their ever-increasing mortgage rates.
The mortgage crisis is a significant contributor to the current state of the economy and, by extension, the number of bankruptcies filed this year. Subprime loan products, the most likely cause of the crisis, were aggressively marketed during the Real Estate boom of the first half of the decade. These loans, which began with low teaser rates, have since increased to unmanageable levels for borrowers who could only qualify for these products during this time.
While members of both parties debate which plan to implement to aid struggling homeowners in Congress, a coalition of banks and mortgage lenders known as ""Hope Now"" has taken steps to assist homeowners facing foreclosure by modifying existing loans to make payments affordable again. According to reports, over 500,000 homeowners have already benefited from this, but the rate of defaulted loans and foreclosures continues to outpace these efforts.
During the boom, the typical borrowers of subprime loans were consumers from the middle class. However, recent news stories indicate that there are individuals who do not suit the typical profile who are in the same situation. The renowned baseball player Jose Canseco, whose Encino, California property valued at $2.5 million recently went into foreclosure. In April 2008, a news article explained that Canseco was not necessarily ailing financially, but that perhaps the total mortgage he owed on his home far exceeded the property's current value, so he decided to simply abandon it.
The retired baseball player was one of the first celebrities to confess to losing a home to foreclosure, indicating that at least one of the subprime loans used to finance his home was highly likely.
Several online news sources report that a large number of financial experts predict that the number of bankruptcy filings will continue to rise throughout 2008 and 2009. The bottom of the real estate market's free fall will not be reached for some time, and further economic duress and recession-like conditions are anticipated. In the meantime, the discussions in Washington to rescue the economy have yet to reach a consensus as opposing parties continue to criticize proposed plans that aim to primarily assist homeowners facing foreclosure.
Adding to consumers' concerns, gas prices are anticipated to continue increasing throughout the summer, a factor that has contributed to price increases in other necessities, such as food and manufactured goods. This current increase in inflation has also prompted government officials to take immediate action. Homeowners already under pressure from rising mortgage rates can anticipate an increase in their likelihood of filing for bankruptcy. Contacting their lender and attempting to negotiate a loan modification is the best option for homeowners in this situation. Due to the high cost of defaults and foreclosures, lenders favor these alternatives.
" - https://www.affordablecebu.com/
