Reducing foreclosures and stemming the historic decline in housing prices are crucial to repairing the overall economy.
Falling home prices have hurt banks and other financial firms, leaving them less able to lend. States and localities have taken a hit in the form of declining tax revenue and blighted neighborhoods. The housing free fall has plagued home builders as foreclosed homes have gone back on the market, swelling an already huge inventory.
Prospective homeowners have found it increasingly difficult to get credit as asset prices fell and worried bankers tightened loan standards. Some buyers, on a bet that prices will fall even further, have decided to postpone buying a house, thereby lengthening and deepening the crisis.
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