Report: Foreclosure Rate to Increase Next Few Years

A new study conducted by The Pew Charitable Trusts projects that one in 33 homeowners will be in foreclosure within the next two years, with Nevada and Arizona being hit particularly hard.

Homeowners being foreclosed upon may not be the only homeowners affected, according to data cited in the report. An additional 40 million neighboring homeowners may see their property values and their municipalities’ tax bases drop by as much as $356 billion, largely over the next two years.

The report, titled “Defaulting on the Dream: States Respond to America’s Foreclosure Crisis” is the first-ever, comprehensive look at what all 50 states and the District of Columbia are doing to try to address the subprime mortgage fallout. The report finds that more often than not, states are at the forefront of developing policies and programs aimed at preventing more irresponsible loans from being made and improving residents’ ability to stay in their homes.

“Stronger standards from federal policy makers could have helped avert this crisis,” said Shelley A. Hearne, Managing Director of Pew’s Health and Human Services Program. “Future legislation must consider ways to strengthen standards to prevent more troubling loans from being made.”

Pew’s research analyzes two principal data sets: the Mortgage Bankers Association (MBA) 4th Quarter National Delinquency Survey and the Center for Responsible Lending’s (CRL) foreclosure projections and Subprime Spillover data. (CRL is a partner in Pew’s Family Financial Security portfolio, which seeks to advance common-sense solutions to help Americans save for tomorrow and manage debt today.) Both data sets are widely cited and used to understand the nature and magnitude of the nation’s foreclosure challenges. Researchers also conducted extensive interviews and used other data sources to identify state action to address the mounting foreclosure challenges facing the country.

The complete report and 50 state-specific fact sheets assessing how each state is being affected by and responding to the foreclosure crisis can be obtained at www.pewtrusts.org or www.pewcenteronthestates

Source: Pew Charitable Trusts