Copyright ©2010 NPR. For personal, noncommercial use only. See Terms of Use. For other uses, prior permission required.

MELISSA BLOCK, host:

From NPR News, this is ALL THINGS CONSIDERED. I'm Melissa Block.

MICHELE NORRIS, host:

And I'm Michele Norris.

Many economists say the U.S. won't fully recover from the recession until the housing market recovers. But the number of homeowners facing foreclosure continues to rise.

And as NPR's Anthony Brooks reports, the foreclosure crisis is now deepening in states like Massachusetts, places that were initially spared the worst of the real estate collapse.

ANTHONY BROOKS: Paul Collier is an attorney in Cambridge, Massachusetts, who represents homeowners facing foreclosure. Collier says these days he's busier than ever.

Mr. PAUL COLLIER (Attorney): The financial conditions that created this meltdown and the legal conditions that created the meltdown are still there.

BROOKS: Last month, banks took more than 1,300 Massachusetts homes - more than double the rate of the same period last year. That, according to Timothy Warren, CEO of the Warren Group, who tracks real estate in Massachusetts.

Mr. TIMOTHY WARREN (CEO, Warren Group): Foreclosures are at high levels right now. People are entering foreclosure at a very high rate. And, you know, that indicates a certain level of economic distress and that we're probably going to be facing that for some period of time.

BROOKS: The historically high foreclosure rates are due in part to banks working extra hard to get those non-performing loans off their books. In other words, they want to close out the bad loans and resell the homes to people who can afford them.

Beyond that, Aaron Gornstein, who heads an affordable housing advocacy group in Boston, says the unemployment rate remains stubbornly high.

Mr. AARON GORNSTEIN (Director, Citizens' Housing and. Planning Association): People are losing their jobs or have reduced work hours. We have a lot of people in the construction trades that are unemployed - close to 40 percent. So those people are falling behind on their mortgage. They can't keep up and, as a result, they're going into foreclosure.

BROOKS: Joel Searby agrees and says the high foreclosure rate has more to do with the tough economy than with the fallout from the subprime mortgage crisis. Searby is with a Florida research company that polled 500 Pennsylvanians who lost their homes to foreclosure, and asked them why.

Mr. JOEL SEARBY (Pollster, Strategic Guidance Systems): Forty-one percent had a prime, fixed-rate loan, while only eight percent had a subprime adjustable loan. The most significant finding is that those experiencing foreclosure experience job loss in a combination. That is, they didn't just simply lose their job, they lost their job and then something else happened.

BROOKS: Something like medical bills, divorce or a relative moving in. He says the message is that foreclosures are tied more closely to bad economic conditions than to the type of loan. Searby says he found the same results in Florida and Nevada, two states hit the hardest by the real estate crisis.

According to a recent RealtyTrac report, in the first half of this year, the number of foreclosures went up in three-quarters of the largest U.S. metropolitan areas, compared with a year ago.

Mr. COLLIER: And until we do something about it we are going to be unable to resolve the current economic crisis.

BROOKS: Again, Cambridge attorney Paul Collier. He says foreclosures not only hurt millions of individual homeowners, they destabilize neighborhoods and drag down housing prices.

Collier says federal initiatives that encourage banks to rework loans and avoid foreclosures are too weak because they're basically voluntary. But he says it doesn't have to be that way. Collier points out that in the wake of the 1930s Depression, some states enacted tough measures to compel banks to lower monthly payments, and that dramatically reduced foreclosures.

Mr. COLLIER: States like Kansas and Iowa simply adopted mandatory mediation. That is, every lender had to sit in a room with a professional mediator and a homeowner and discuss modification of that loan. And foreclosures went down within 20 months of the passage of that bill by 94 percent.

BROOKS: In the absence of that kind of legislation, it might help if more Americans facing foreclosure knew about state and federal programs that could help them, programs that provide incentives to rework loans and lower monthly payments.

But Joel Searby - who did the polling on those facing foreclosure in Pennsylvania - found that a majority of those surveyed didn't know how or where to get help.

Mr. SEARBY: There's no doubt that there's been a disconnect between what the federal government and state governments have been offering and what these folks who are experiencing foreclosure are needing.

BROOKS: So until that changes or until the economy dramatically improves, the number of foreclosures will likely continue to rise in the months ahead.

Anthony Brooks, NPR News.

Copyright © 2010 NPR. All rights reserved. No quotes from the materials contained herein may be used in any media without attribution to NPR. This transcript is provided for personal, noncommercial use only, pursuant to our Terms of Use. Any other use requires NPR's prior permission. Visit our permissions page for further information.

NPR transcripts are created on a rush deadline by a contractor for NPR, and accuracy and availability may vary. This text may not be in its final form and may be updated or revised in the future. Please be aware that the authoritative record of NPR's programming is the audio.

Comments

 

Please keep your community civil. All comments must follow the NPR.org Community rules and terms of use, and will be moderated prior to posting. NPR reserves the right to use the comments we receive, in whole or in part, and to use the commenter's name and location, in any medium. See also the Terms of Use, Privacy Policy and Community FAQ.

Support comes from: