Snapshot of a Foreclosure Crisis


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Published: March 17, 2010

15 Fast Facts


The magnitude of foreclosures and associated costs are daunting; the numbers tell the story.


1.

Number of foreclosures initiated since 2007

6.6 million

2.

Projected foreclosures during next 5 years

Up to 12 million

3.

Portion of all homeowners seriously delinquent on their mortgage

1 in 9

4.

Portion of homes where owners owe more than property value

Nearly 1 in 4

5.

Drop in residential lending in 2008 from 2007

Over a trillion

6.

Between 2006 and 2008, decline in existing home sales

24%

7.

Between 2006 and 2008, decline  in new home sales

54%

8.

Between 2006 and 2008, % decline in new home construction

58%

9.

In 2009, number of neighboring homes estimated to have lost property value because of nearby foreclosures

69+ million

10.

Average price decline per home (2009)

$7,200

11.

Estimated property value lost because of nearby foreclosures (2009)

$502 billion

12.

Share of 2006 subprime loans that went to people who could have qualified for loans with better terms

61%

13.

Typical rate difference between a 30-year, fixed mortgage and the initial rate of a subprime adjustable-rate mortgage

less than 1%

14.

Cumulative default rate for subprime borrowers with a similar risk profile to borrowers with lower-rate loans

More than
3x higher

15.

During first 4 years, typical extra cost paid by subprime borrowers who got a loan from a mortgage broker, compared to other similar borrowers

$5,222


Sources

1. Foreclosure starts published by the Mortgage Bankers Association.

2. From 4th quarter 2008 to 2014. Goldman Sachs Global ECS Research, Home Prices and Credit Losses: Projections and Policy Options (Jan. 13, 2009); also Hope Now national data.

3. Mortgage Bankers Association National Delinquency Study (February 2010).

4. Ruth Simon and James R. Hagerty, "One in Four Borrowers is Under Water," Wall Street Journal (November 14, 2009).

5. National Mortgage News (March 9, 2009).

6. US Census Bureau, http://www.census.gov/const/quarterly_sales.pdf and http://www.census.gov/const/www/quarterly_starts_completions.pdf.

7. US Census Bureau, note 6.

8. US Census Bureau, note 6.

9. CRL research based on data from Credit Suisse, Moody's Economy.com, and the Mortgage Bankers Association. http://www.responsiblelending.org/mortgage-lending/research-analysis/soaring-spillover-3-09.pdf.

10. CRL, Credit Suisse, Moody's Economy.com, MBA; note 9.

11. CRL, Credit Suisse, Moody's Economy.com, MBA; note 9.

12. Rick Brooks and Ruth Simon, "Subprime Debacle Traps Even Very Credit-Worthy As Housing Boomed, Industry Pushed Loans To a Broader Market", Wall Street Journal at A1 (Dec. 3, 2007).

13. Letter from Coalition for Fair & Affordable Lending to Ben S. Bernanke, Sheila C. Bair, John C. Dugan, John M. Reich, JoAnn Johnson, and Neil Milner (Jan. 25, 2007) at 3.

14. Lei Ding, Roberto G. Quercia, Janneke Ratcliff, and Wei Li, "Risky Borrowers or Risky Mortgages: Disaggregating Effects Using Propensity Score Models," Center for Community Capital, UNC at Chapel Hill (September 13, 2008) http://www.ccc.unc.edu/abstracts/091308_Risky.php).

15. Center for Responsible Lending, Steered Wrong: Brokers, Borrowers and Subprime Loans (April 8, 2008) http://www.responsiblelending.org/.