A report about the potential measures to handle the continuing crisis on the US- real- estate Market relating to the reformation of insolvency law

Topics: Real estate, Mortgage, Bankruptcy Pages: 3 (893 words) Published: October 11, 2013
A report about the potential measures to handle the continuing crisis on the US- real- estate Market relating to the reformation of insolvency law Due to recent ratings over 11 million households, which approximately is every fourth mortgage debtor, show negative equity. “Negative Equity” means that financial assets summed up together are still under the merit of the mortgage dept. These households are therefore “underwater”. More than 4 million of these “underwater” households show that their outstanding depts excess the actual merit of their house by more than double. These circumstances can be traced back to the housing bubble which triggered the decline in prices of real estates. For example in some cases the price declined by 50% comparatively to the maximum value of the houses before the bubble which indicates that by now “negative equity” is somewhere around $700 billion. Furthermore you have to mention that out of this situation forced sales prevailed the real estate market’s recovery. For example many people who lost their jobs on account of the crisis sold their houses, which was inefficient because they were sold at less than fair value. These forced sales are observable because they led to decline of the house-prices all over the neighborhoods, which means they were only sold to 30-35% of the marginal value of the mortgage. One these grounds also the manpower market took damage, which can be seen in the fact that approximately 0,5 – 1,25% of the unemployment rate are forced by the circumstances of the housing bust. There are also some factors which played a decisive role for example; on the one hand moving to another city is mostly not a good option, because the disposition of the house is economically not efficient., on the other hand you have to mention that a person filed for personal bankruptcy ensuing is registered in a data base and that is the reason why this person cannot find a new job very easily. Furthermore you can say that from a...
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