In the spring of 2009, Dena Cooper received what she thought was a lifeline from the US government. The single mother of four had her monthly mortgage payment cut to $1,000 from $1,500 under a federal programme intended to reduce defaults and foreclosures.
Less than two years later, her housing situation is again critical. Even the lower payments proved too expensive for Ms Cooper once her income as a nurse’s assistant in Morris Plains, New Jersey, was cut after surgery kept her out of work for several months. She has since fallen behind again on her mortgage, joining a growing number of American borrowers who redefault on home loans even after their payments are substantially reduced. “I just can’t get back on my feet,” says Ms Cooper.
Until the housing market recovers there will be no true recovery in consumer spending and the economy will remain dependent of stimulus packages.. how large can the deficit grow?