CRL Warns About Nearby Subprime Foreclosures

Over 44 million homeowners could see the value of their properties decline by an average of $5,000 due to a nearby subprime foreclosure, according to a new study by the Center of Responsible Lending."The total decline in house values and tax base from nearby foreclosures will be $223 billion," the CRL issue paper says. The Durham, N.C.-based advocacy group warns that minority communities with large concentrations of subprime borrowers could experience more severe declines in property values. The CRL report is based on an academic study that found one foreclosure in a neighborhood could reduce surrounding property values by 0.9%. It is also based on CRL projections that 19.4% of subprime loans originated in 2005 and 2006 will end up in foreclosure and that 1.1 million borrowers will lose their homes. "By any measure, the epidemic of home losses is severe, and will not only harm families who lose their homes, but also nearby homeowners who suffer drops in their property values," the CRL paper concludes. The group supports legislation that would allow bankruptcy judges to restructure mortgages. It can be found online at http://www.responsiblelending.org.