BANKRUPTCY UPDATES

• Minnesota Distillery of Fine Vodkas Files Chapter 7 Bankruptcy (February 10, 2012)
• Court Approves Newspaper Magnate Lee Enterprises’ Bankruptcy Plan (February 07, 2012)
• Suspected Felon Filed for Bankruptcy Shortly Before Untimely Death (February 09, 2012)
• Ireland Overhauls Bankruptcy Laws (February 06, 2012)
• IL State Representative Files for Chapter 13 Bankruptcy (February 08, 2012)

Study Paints Bleak Social Picture of Ills Caused by Poor Housing Industry

A new foreclosure study by the Joint Center for Housing Studies at Harvard University tells little news about the mortgage crisis: mortgage foreclosures are rising, home prices are lowering and no one seems to be able to predict when things are going to end.

However, its impressive collection of facts does more than paint a bleak picture of the housing industry going forward. These facts provide some insight into how the housing economy works, and how a downturn in the economy affects more than just the homeowners who are facing loss of home.

According to the study, the rates of home price declines and mortgage defaults are the worst on record since data started being collected in the 1960s, which should come as no surprise to most Americans.

The Harvard center's consensus? The "slump in housing has not run its full course," according to the study's introduction.

As many Americans are making changes in their lifestyles to accommodate higher prices of living for necessities such as food and gas, they are wondering if and when they can expect lending standards to loosen up, high prices to fall back to where they once were, and housing prices to stabilize. While the Harvard study can't predict the future, some of their numbers will change the way you look at the economy:

• From 2006 to 2007, the foreclosure rate on subprime mortgage loans nearly doubled, from 4.5 percent to 8.7 percent. The foreclosure rate on adjustable-rate mortgages for subprime borrowers more than doubled, from 5.7 percent to 13.4 percent.
• Because they performed so dreadfully, lenders have nearly stopped issuing subprime loans. In real dollar values, the value of subprime loans fell over the course of 2007 from $139 billion to $14 billion.
• The demographics of homeowners are changing: the share of minority household heads of the total has risen to 29 percent, and at this rate is expected to reach 35 percent in 2020; the study found that minority households contributed over 60 percent of housing growth during the bubble years 2000-2006. Despite this, the national percentage of homeowners dropped to 68.1 percent, with 2 million more renters coming onto the scene last year.

Many social factors are linked to the current state of the industry as well. Here are some of the most interesting and influential:

• In 2006, 4 million new households became classified as "severely-burdened," meaning that more than half of income goes to paying rent; this raises the total in the US to $17.7 million. More than 1 out of 6 children (12.7 million) in the US live in severely-burdened households.
• Almost 1 in 5 low-income families, and 1 in 4 low-income minority families, reported living in housing that was structurally inadequate.
• Over the last 10 years, housing assistance programs fell from 10 to 8 percent of total discretionary domestic spending by the government, yet the number of those who qualified to receive assistance grew by more than 20 percent.
• Currently, around 6 million rental units are able to be afforded by the 9 million households with the lowest incomes in the US, but almost half of these units are occupied by higher-income households or stand vacant.

As you can see in the study, the picture expands greatly to include some very real problems that affect nearly everyone in America. To be sure, those with financial troubles often have little recourse in the current housing industry.

About Total Bankruptcy

Total Bankruptcy aims to offer new, relevant foreclosure and bankruptcy information.

Please stay tuned to Total Bankruptcy for bankruptcy news as it develops.

If you're considering filing bankruptcy, fill out the below form to connect with a sponsoring bankruptcy lawyer for free:

Subscribe