Current Regulations Failing to Address Biggest Foreclosure Driver

By Jann Swanson

Posted To: MND NewsWire

Current regulatory policy is not addressing the primary cause of foreclosures . CoreLogic’s deputy chief economists Sam Khater says, in an article on the company’s blog, that, while lack of equity has long been known to play an important role in loan defaults in general, CoreLogic is the first to specifically examine leverage in the residential lending sector. The study comes at a time, he says, that policy makers have been attempting to loosen lending by reducing the price and expanding the quantity of low down payment real estate credit. The company looked back over five decades to examine the role leverage plays in mortgage foreclosures . They found: Homeownership rates are the same today as five decade ago but foreclosure risk is two to three times higher. The primary driver of default…(read more)

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