Thursday, March 17, 2011

The Mounting Costs of Foreclosures

The Home Defenders League, a community activist organization in California, released a report this week with the provocative title of “Home Wreckers:  How Wall Street Foreclosures are Devastating Communities.”  You can find the report here

The report concludes that the true cost of foreclosures in California will be $650 billion to $1 trillion.  It estimates a $632 billion to $1 trillion loss in property values; $3.8 billion in lost property tax revenue; and $17.4 billion in foreclosure-related costs to be borne by local government.

I'm working on an op-ed for the Huffington Post regarding the property tax piece.  It is a variation on an argument you've probably heard from me before.  It makes no sense that we are embracing a policy that forces borrowers and lenders (and, by extension, taxing authorities) to internalize temporarily depressed property values, particularly given the long-term costs of doing so.

Tanya Marsh

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California had high foreclosure rates for a long time now. I am interested to see if it's government will adopt policy reforms much like the nation is currently undergoing. On a national scene, the government backed 94% of all mortgages. There appears to be fairly broad support for reducing the role of programs like Fannie Mae,however, finding consensus on what should replace the current system is proving elusive. This I think is reflected in California's situation as well.

Thanks for the post


Posted by: Michael | Mar 17, 2011 4:36:01 PM

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