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.
"The escalation of foreclosures on all types of loans is alarming," said Michael Calhoun, President of CRL. "It's easy to think, "Well, that's tough luck for the families that lose their homes.' The truth is that foreclosures are costing neighboring families hundreds of billions of dollars and dragging down the entire economy. Foreclosures started today's crisis, and foreclosures will keep the crisis going if this epidemic continues."
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 mortgage industry's track record so far shows that loan modifications are not likely to succeed with superficial fixes that fail to lower a homeowner's monthly payments. Recognizing that it is in the national interest to stop the foreclosure epidemic, the Obama Administration has put in a new plan that includes stronger incentives for mortgage companies to make more and better loan repairs. New guidelines encourage earlier intervention and loan modifications more likely to reduce monthly payments—tools designed to stabilize the housing market and keep people in their homes.
As we await the results of the next wave of mortgage modifications, a new foreclosure starts every 13 seconds—nearly 6,500 a day. We call on lenders and loan servicers to work with homeowners in good faith to dramatically increase loan modifications that actually stop foreclosures and keep people in their homes.
For more information: Kathleen Day at (202) 349-1871 or kathleen.day@responsiblelending.org; Ginna Green at (510) 379-5513 or ginna.green@responsiblelending.org; Charlene Crowell at (919) 313-8523 or charlene.crowell@responsiblelending.org.