Las Vegas had always been proud that the housekeeper too could realize her dreams of house ownership. But the housing boom had made prices beyond the reach of many. Three years previously Culinary Union came to an agreement with the casino firms to start a programme that would offer monetary help for those purchasing homes. The government too came forward. This resulted in many persons and families having happy tales to tell despite foreclosure blues.

Carla Henderson is in her late forties. She came to Las Vegas 25 years ago with her husband and raised children working in the casinos. Her dream was to set up a mom-and-pop eatery. But life decreed otherwise. They have are now with the custody of their three grandchildren roughing it out in a rented condo. Henderson saw before her eyes the neighbourhood falling apart and she became afraid of the safety of the kids. When shooting became a common phenomenon they decided to hunt for a house.

They sought counseling but the papers were not there. At that point the housing programme of Culinary Union came to their rescue. They attended a prescribed 8 hour course related to housing matters while targeting a property. Goons too focused on it. They damaged the walls and vandalized the toilets and plumbing. The repair bill amounted to $80,000.

The Hendersons then turned to another house and this time things worked out fine with the help they got as down payment from the fund that had been set up by the union. Last spring the deal was closed. After moving in she hosted a party and invited the loan officer, home inspector and the realtor as a gesture of thanks. Carla looks at the secure surroundings and feels contended determined never to sell and move.

Another happy person is Minjia Li in his mid twenties. A graduate form Clark School he got a degree in electrical engineering. He went back to Shanghai and came back with his wife. But the crazy housing zoom made it impossible to buy a house. It seemed they would never be able to do so in their lives. But when the recession started and prices began to fall they took the help of the programme created by the union, attended the education course and made their dreams come true. Money came from relatives in China and the officials helped in managing it. The experience has so much impressed Li that he has now started that he now got a Realtor’s license and doing brisk business. They live in spacious four bed-roomed house with garage for three cars.

On Friday last the Obama administration declared that an aid of 1.5 billion will be given to the five different states of the US where the foreclosure crisis has reached an extreme point. This was announced by the President himself at a meeting held in Henderson, a place severely within the clutches of foreclosures.

The various housing agencies of Nevada, Michigan, California, Arizona and Florida will receive the financial help. These are the states which have witnessed a reduction in the prices of property by 20%. The monetary help is rendered with the hope that the owners will be able to keep their properties.

The financial help is aimed at relieving those areas reeling under the grip of foreclosure. It is also meant to strengthen the agencies that have sound knowledge of the crisis, so that they may make appropriate alterations in the financial programs and rescue the owners from foreclosures.

Nevada’s economic situation is rather poor and that is greatly responsible for the diminishing popularity of the Senate leader Harry Reid. Nevada is the state with the maximum number of foreclosed properties in the nation. Nearly 65% of the owners in this state are unable to pay their mortgage interests.

President Obama intends to help states with new ideas to curb the foreclosure crisis. The monetary aid will come from TARP, the Troubled Asset Relief Program. While providing the aid, preference will be given to those states which will try to minimize the unemployment problem. The help from the government will be used to finance programs that aim at helping jobless people or those that will bring relief to owners, unable to pay off the high mortgage interests.

Richard Green, who is the Director of the Southern California University, is of the opinion that the total sum of 1.5 billion is not an adequate amount to master control over foreclosure in the state of Nevada. It is here where most of the owners go underwater. The simply give up their properties even though they can afford to pay.

Experts feel that the principal amount should be reduced, when the value of the houses become less than the mortgage they hold. This would definitely improve the situation to quite an extent.

The Deputy Director of the National Economic Council, Diana Farrell, observes that that foreclosure are reducing in number and the prices of houses are rather stable these days. She along with others is rather hopeful that soon people will see an end to this disastrous economic situation.

While talking loudly about stabilizing of housing prices across the nation, Obama trumpeted the release of a $1.5 billion plan to combat foreclosures. At a meeting in the town hall of Las Vegas Obama said that the funds would be granted to the states that have been worst hit by the crisis. Top on the list is California. It aims to help those homeowners who are unemployed and other besieged borrowers.

Obama said, “What government can do is to help responsible homeowners to stay in their homes. The government can stop preventable foreclosures. What we can do is stabilize the housing market so home values can begin to rise again.”

Leeway would be given to the states and local housing agencies to customize their plans for the funds they would get. The Treasury would give its approvals to the suggestion. The plans target to help the borrowers who are unemployed. It would also help those who have gone underwater (loan value being more than the fallen worth of the property mortgaged). Those with second mortgages would also be helped. The funds would be disbursed from the TARP – Troubled Asset Relief Programme. A formula would be followed calculated on the fall in housing prices and unemployment.

Senator Barbara Boxer (Democrat) said, “I am pleased that President Obama recognizes that California and other states hit hard by the housing crisis still need additional resources. While there is still more to do, this investment will provide help to homeowners who are struggling during these tough economic times and are at risk of losing their homes.”

But Marty Rodriguez a realtor based in Glendora was not over enthusiastic by the announcement by Obama. Her main concern was that how could one be sure that the right people are being helped? There is a crowd who are not eligible for the modification of mortgages but who are trying to do so with impunity. She commented, “You are throwing good money after bad money. You have to be so careful with that.”

Some of the worst foreclosure hit states along with California are Arizona, Florida, Michigan and Nevada. These states qualify for this programme because the average prices of their homes have fallen by over 20% from the time of the housing peak.

Steve Johnson of Metrostudy Southern California who is researching in real estate said, “Any way we can stem the flow of increasing notices of default in the marketplace is a good thing.”

The US economy is perhaps showing signs of a turnaround. Prices of homes and consumer confidence inched up the scale. That means foreclosures would be abating now.

In November, the The S&P/Case-Shiller home-price index went up by 0.2 per cent. This was the sixth time that it happened. The confidence gauge of the Conference Board also increased in the last one year. In the last few years, home values had plunged by 32 per cent. Now they have gained one-tenth of that.
This shows that the nation’s worst recession may be abating. Still the unemployment level is at 10 per cent. That means America will be slow in recovering from the downturn

Stephen Stanley, chief economist at RBS Securities Inc. says, “We are starting to come back, but it’s going to be slow. The labor situation is the linchpin for practically everything.”

The stocks crashed and that erased gains made earlier. Stocks of telephone companies and banks also dropped.

It may be pointed out that the government had come up with tax credit program for first-time homeowners. That had given a boost to home sales. However, the gains may not last long. Home foreclosures would increase as more people lose jobs. Even those with sound credit history are faltering on mortgage payments. Hence, foreclosures have become common.

The economist at Barclays Capital Inc, Michelle Meyer, says, “We’re seeing what looks to be a bottoming out in prices. There is a risk we see further downside, given the large amount of foreclosures set to enter the market and the uncertainty of the effects of the homebuyer tax credit on prices.”
Economists say that prices would plunge by 5 per cent in the next one year. It may be pointed out here that prices had dropped by 12 per cent. Economists, however, say that the situation will improve only after there is improvement in employment scenario. As of now, it is the middle class who comprise the largest section of defaulters. Even 4 years ago, it was not the case – it was the people who had taken exotic sub prime mortgages who defaulted.
However, the situation is improving. A senior economist at Wells Fargo Securities, Mark Vitner says, “It’s a slight improvement, and given where consumer confidence has been the last four, five months, a slight improvement is a nice takeaway. It appears labor-market conditions are not getting any worse, and that’s a plus.”

An American group has been charged on 4th February 2010 at Haiti for abduction of children. The leader of the team, Laura Silsby is a businesswoman from Idaho who has behind her a complicated financial history. Employees had not been paid their wages, state liens had been placed on a bank account of one of her companies and lawsuits are pending in small claims court. She has also defaulted on a mortgage and was facing foreclosure troubles in Idaho. According to the office of Ada County Tax Assessor the house is located in an incomplete sub-division in Meridian – Boise suburb.

In November 2008 Silsby had used the address of this house to register a non-profit organization – New Life Children’s Refuge. She had bought it for $358,000 in 2008. Early last December her house was foreclosed upon and it is now lying vacant with a notice in the front yard about the impending foreclosure sale. One of her neighbours LaChelle Bohner said, “I get mail for her all the time.” The mail contained collection notices.
Silsby’s business named Personal Shopper offers online shopping facilities. It is now facing many legal charges. It has been mentioned as many as 14 times for unpaid wages. The reasons cited for this were “no money for payroll” and that it was “fully investor funded and investors have been hit hard by the economy.” The employees have come out winners in nine cases compelling Personal Shopper to cough up $31,000 as wages and an extra $4,000 as fines.

The Department of Labor of Idaho had in the start placed liens on the firm’s bank account to lay hands on the money. At this point the company wanted to know how much they owed and agreed to pay it said Bob Fick of the department. He also added that complaints about unpaid wages were not uncommon.

The government officials said that Personal Shopper cleared all the wage dues that the state had upheld. But another ex-employee, Robin Oliver, has filed a case against the firm in a civil court saying that the company owed her over $22,000. The trial is scheduled for 22nd February. Silsby’s attorney declined to comment on it.

Chris Holmes was one of those who had managed to get back his wages. He commented that it was not surprising that Silsby was facing trouble at Haiti. He said that Silsby always showed “lack of forethought” and kept on changing her business models to keep the investors happy – the investors who kept her firm alive.

The US economy is in a recession. Unemployment is at the peak level of 10 per cent. As people lose jobs, even those with excellent credit history are faltering on mortgage payments. Hence, foreclosures have become common. The real estate market is like a stumbling block to the market recovery. The construction industry has hit the economy very badly.

In fact, construction of apartments fell by 4 per cent to about 557,000 from the previous figure of 580,000 late last year. The number of applications for new homes has increased, what with spring round the corner.

The economists had forecast that 580,000 new homes will be constructed. However, the figures were not achieved and construction fell by 1 per cent in the western region. It however, increased by 3 per cent in the southern area.

As David Crowe, chief economist at the National Association of Home Builders, points out, builders are still tense about the employment scenario. With the number of foreclosed properties still at an alarmingly high level, builders regard foreclosures as competition. Even financing is steadily drying up in the last two years.

However, application for fresh construction rose by 11 per cent. This has touched an annual level of 653,000. Economists had never anticipated that. In fact, the construction had reached its peak since end October. Analysts expressed divergent opinion about the state of the economy. Permits for new homes have suddenly shot up. That should improve the employment scenario in the industry.

Economists observe that the country is doing much better than earlier. Even six months ago, they had never expected such performance.

Another economist Sal Guatieri of BMO Capital Markets says that the construction slowdown may ultimately affect the economy. It may pull down output. Guatieri says the

Crises would “leave an enduring footprint on this recovery.” However, the industry will recover soon from the crises. The market is replete with foreclosed properties. Builders will find it difficult to compete in such a scenario.

Banks have also tightened their norms about lending. The Federal Housing Administration has also tightened norms for lending to buyers. That would help the lender to ramp up the finances. However, inflation pressures eased last year as there has been a drop in energy prices. Energy prices had dipped in December.

Experts, however, feel that unless the employment scenario improves, there will not be a let up in foreclosures.

There are many middle class folks like Scott and Doris Stauble who are left hanging without federal help in the middle of the foreclosure crisis. Till about two years previously the couple enjoyed a total income of $70,000 from the earnings of both. But one of them is without a job while the other earns to somehow survive but not enough to pay the high mortgage monthly payments. Now their house is under threat of foreclosure but no help is available because they are not poor but belong to the middle class category. They would now be lucky if they manage to short sale their house in Cintas. This situation was not to have happened to the Staubles who had good jobs and health care coverage. But the recession has made the impossible possible in a bad sort of way.

Senior lecturer Diana Pearce, of University of Washington said, “About 95 percent of Americans identify themselves as middle class. So what does middle class mean? It’s more of a political term.” The federal government does not clearly give the definition of middle class – it only states who the poor are in figures and statistics.

In 2008 a family of four was thought to be poor if the yearly income of the entire family was not more than $22,025 before calculation of taxes – as per the Census Bureau. Pearce is of the opinion that this poverty definition is antiquated. Moreover one yardstick cannot apply to the entire country. Pearce explained, “Costs in places, especially like Massachusetts, are a whole lot higher than places such as Mississippi. Twenty-two thousand (dollars) goes a lot farther in the South.”

In the middle of the 90’s Pearce introduced her own definition of poverty and named it the Self-Sufficiency Standard. She elaborated that a family comprising of 4 adults and 2 school going children in Greater Lowell would require a minimum of $58,125 per year to be independent of government help. The calculation is founded on “bare-bones budget” – her yardstick taking into count food, housing, medical care, taxes as well as child care – all at the lowest government subsidized rate. It excludes birthday feasts, eating out, movies or take home packets of Chinese delicacies.

By the yardstick of Pearce the Staubles would require $36,484 to barely survive. Annually they bring home and additional $2,000 per year but the family has to spend over $300 each month for medicines and doctors. Pearce calculates that 25% of the families in the country, exclusive of the seniors and disabled are poor. As such they require government help. The federal calculation is half her estimated figure.