FOR IMMEDIATE RELEASE Contact: Jesse Van Tol (202) 464-2709
April 16, 2009 jvantol@ncrc.org
Central Cause of Credit Market and Economic Woes Gains Momentum
Washington, DC – Mounting foreclosure numbers released today reinforce the reality that the economic crisis gripping the nation is far from over. In March, more than 340,000 homes fell into foreclosure according to Realty Trac, a 46% increase from March 2008. Foreclosures are, and have been, the epicenter of the collapse of the housing and credit markets and overall economy. Throughout 2007 and 2008, forecasts saw a near-term bottoming out of the nation’s economic woes, only to be contradicted by the reality that the credit markets and economy will continue to sour until the foreclosure crisis abates.
President Obama recently unveiled the most comprehensive and aggressive foreclosure prevention program to date, the Making Home Affordable Program (MHAP). But, the possible effects of MHAP on foreclosures are not yet known since it is not yet fully operational. Several programmatic aspects of the plan are being re-examined and possibly refined. These issues include, but are not limited to, providing better guidance on the treatment of second liens and unaffordable loan principal balances, interest rate increases after the first five years of loan modification, protection of servicers from possible law suits when performing loan modifications and the voluntary nature of the program from the perspective of investors.
Consumer groups, including the National Community Reinvestment Coalition (NCRC), have met with key Presidential advisors on the program and have shared with them several program features that would improve its potential success. “Our discussions with Administration officials have been productive and we look forward to continuing to work together to solve this extraordinary housing and credit market crisis,” said John Taylor, NCRC president and CEO.
But even if all these issues are fully resolved, MHAP will not deal with the totality of the foreclosure crisis. Specifically, MHAP does not address unemployment-driven foreclosures. “Broader strategies beyond traditional loan modification are needed when foreclosures are triggered by involuntary job loss,” said Jim Carr, NCRC chief operating officer. Reconciling recent positive economic news with the latest rise in foreclosure numbers, Carr stated “almost every positive piece of economic news, from bank profits to housing starts, loses much of its luster if the numbers are carefully examined.” Carr added, “President Obama has inherited the worst economic crisis in more than half a century. Expectations that he has, or could, resolve the nation’s sharp economic downturn in less than 100 days are unrealistic and unreasonable.”
