Snapshot of the Foreclosure Crisis

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15 Fast Facts (December 2009)

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

 

 

1.

Number of foreclosures initiated since 2007

Nearly 6 million

2.

Projected foreclosures on all types of loans
during the next 5 years

13 million

3.

Portion of all homeowners late on their mortgage

1 in 7

4.

Portion of homes where owners owe
more than property value

Nearly 1 in 4

5.

Drop in residential lending from 2008 compared to 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 construction

58%

9.

In 2009, number of neighboring homes that will lose property
value because of nearby foreclosures  

69+ million

10.

Average price decline per home (2009)

$7,200

11.

Total property value lost because
of nearby foreclosures (2009)

$502 billion

12.

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

61%

13.

Typical rate difference between a 30-year,
fixed mortgage and the initial rate of
aggressively marketed ARM loans

Half to 8/10%

14.

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

More than
3x higher

15.

During first four years of a loan, the typical extra cost paid by
subprime borrowers who get a loan from a mortgage broker,
compared to other borrowers with similar characteristics

$5,222

Sources

  1. Center for Responsible Lending, Continued Decay and Shaky Repairs: The State of Subprime Loans Today, p. 2, http://www.responsiblelending.org/mortgage-lending/research-analysis/continued-decay-and-shaky-repairs-the-state-of-subprime-loans-today.html.
  2. From 4th quarter 2008 to 2014.  Goldman Sachs Global ECS Research, Home Prices and Credit Losses: Projections and Policy Options (Jan. 13, 2009), p. 16; see also Credit Suisse Fixed Income Research, Foreclosure Update: Over 8 Million Foreclosures Expected, p.1 (Dec. 4, 2008).
  3. Mortgage Bankers Association National Delinquency Study (November 19, 2009).
  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 combined with data from Credit Suisse, Moody's Economy.com, and the Mortgage Bankers Association.
  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).
  15. Center for Responsible Lending, Steered Wrong: Brokers, Borrowers and Subprime Loans (April 8, 2008).