The Effects Of Foreclosures On The U.S. Economy
Experts now agree that a lot of mortgages shouldn’t have been made in recent years. It was foolish for lenders and homeowners to bet housing prices would keep rising. But allowing millions of foreclosures to punish the imprudent isn’t smart. It’ll damage entire neighborhoods. “It’s not like ‘repo-ing’ cars, where you can move them around,” says Richard Syron, chairman and chief executive of mortgage giant Freddie Mac. An empty house loses 20% of its value in six months, he says. Even worse, the larger economy is at risk. Cue Federal Reserve Chairman Ben Bernanke: “A sharp increase in foreclosed properties for sale could weaken the already struggling housing market and thus, potentially, the broader economy.”
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