Study Cites 'Collateral Damage' of Foreclosure

The foreclosure of a single-family home, especially one that leaves the home vacant and unsecured, may generate municipal costs in excess of $30,000, according to a new study by the Joint Center for Housing Studies at Harvard University.In addition, area homeowners, business owners, and landlords stand to lose "if a rash of foreclosures brings down property prices, accelerating the decline of an entire neighborhood," the study says. Entitled "Collateral Damage: The Municipal Impact of Today's Mortgage Foreclosure Boom," the report was conducted by William Apgar, a senior scholar at the Joint Center, and Mark Duda, a research fellow there. It was funded by the Minneapolis-based Homeownership Preservation Foundation. "Foreclosures are on the rise across the country -- especially foreclosures of higher-risk nonprime mortgages," said Mr. Apgar, a former commissioner of the Federal Housing Administration. The report concludes that serious delinquencies and foreclosures for nonprime loans can be 10 times higher than for prime loans. The study urges that government, the mortgage industry, and community leaders work together to support grassroots efforts to help homeowners facing foreclosure; reduce the incidence of poorly underwritten or fraudulent loans; and encourage industry participants to "pay their fair share" of foreclosure-related costs.