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Foreclosure filings continue to rise nationwide, with new data showing an increase of 30 percent in February from the same month one year ago. An analyst assesses the numbers and how they tie to the overall economic picture.
The foreclosure problem is showing no signs of easing. New figures out today show they were up 30 percent last month compared to a year ago. Roughly 290,000 households received at least one foreclosure notice in February.
Andrew Jakabovics studies these matters as the associate director for housing and economics at the Center for American Progress, and he joins me now.
Andrew, why are foreclosures continuing to climb?
ANDREW JAKABOVICS, Center for American Progress: Well, I think the loans that we're seeing going bad now are really tied to the fact that unemployment has gone up considerably. We're now at 8.1 percent unemployment in the country as a whole.
But to the extent that foreclosures are really a lagging indicator, the numbers that we see in February really sort of show the weakness that existed in a lot of places already at the end of last year.
So you're saying that this is something different? This isn't interest rates being adjusted up or subprime mortgages blowing up in their third or fourth or fifth year, but this is just people without enough money to keep servicing their loans?
It's a combination of the two. There's certainly still subprime loans that are going bad, although we're sort of at the tail end of some of that. And some of the option ARMs and other exotic mortgage products that are out there are starting to reset, and so some people are seeing some adjustments upwards in their monthly payments that they're unable to make.
But a lot of people that are having trouble now are really having trouble either because they've lost a job. If you're talking about a two-earner family, one of those wages may now have been gone or hours have been cut back and, again, so the take-home at the end of the day is smaller, and so people are having just a harder time making their monthly obligations.
But now aren't we several months into a period where major institutions — big banks, loan servicers, lenders — were saying, no, let's put a moratorium on, let's help people work out their loans? Why are we still seeing these big increases?
So we're looking at sort of two different sets of numbers to some degree. The 290,000 that we saw in February combines not only people who have lost their homes to foreclosure, that the banks have actually taken those properties, but also people who've received notice from their servicer saying that they missed last month's payment. They're now 30 or 60 or 90 days delinquent.
And so, even though servicers may not be proceeding with foreclosure, they're still sending out those notices letting people know that they're behind on their payments.
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