A Foreclosure Filing Every 13 Seconds

by Shannon Moriarty · 2009-06-04 04:03:00 UTC
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Last week, Obama signed a landmark piece of foreclosure legislation into law. But the help didn't come in time to save 1,000,000 homes from foreclosure in 2009. Sadly, it seems the housing crisis, and its devastating spillover effects on people and our neighborhoods, isn't over.

Here's the latest research from the Center for Responsible Lending:

A dismal milestone was reached over the weekend: One million new foreclosures have been filed so far in 2009, according to estimates by the Center for Responsible Lending. This comes on the heels of a new report from the Mortgage Bankers Association, the first quarter 2009 National Delinquency Survey, showing that 12% of all mortgages are now delinquent -- the highest level since the MBA started measuring 37 years ago. (clip)

CRL projects 2.4 million foreclosure starts in 2009, with these foreclosures reducing the property values of some 70 million nearby households a total of $502 billion -- about $7,200 per family. Through 2012, those numbers will rise to at least 9 million foreclosures that will cost 92 million neighboring families $1.9 trillion in lost home value.

The foreclosure crisis pushed us into a recession. Until this problem is fixed, recovery will be slow. The worst part of foreclosures isn't only the people who are displaced, but the external effects on neighborhoods and communities. The CRL's most recent report on the spillover effects of foreclosures is alarming. Here's a clip:

We estimate that, in 2009 alone, foreclosures will cause 69.5 million nearby homes to suffer price declines averaging $7,200 per home and resulting in a $502 billion total decline in property values. During the period 2009-2012, we project that foreclosures will cost 92 million U.S. families some $1.9 trillion in lower home values--an average of $20,300 in lost wealth per household.

Although the federal government has made some steps in the right direction (for example, renters in foreclosed properties are now protected by a federal law), it is clear that not enough it being done to incentivize banks to make a good-faith effort to readjust delinquent mortgages. This is the most effective way to prevent the displacement of people and the abandonment of homes.

Shannon Moriarty has worked in various homeless shelters and service organizations around the country. She is a graduate student studying housing and urban policy at Tufts University.
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