Washington, D.C. – New housing numbers show that annual declines in house prices have hit record lows for the fifth consecutive month and the number of properties in the foreclosure process in the first quarter of 2008 have doubled since last year. The need for congressional action is ever more urgent.
The breadth of the problem is not simply reflected in the magnitude of the house price declines—13.6 percent annual declines for Case-Shiller’s 10-city index and 12.7 percent for the 20-city index—or the volume of properties proceeding to auction or taken by banks—over 355,000 homes in the first quarter of 2008. It’s that all 20 metro areas in the Case-Shiller index have seen six consecutive months of monthly declines. The problem is equally bleak on the foreclosure front, with increases in foreclosure filings in 46 out of 50 states, and 90 of the top 100 metro areas.
The depth and breadth of the housing crisis continues to outpace the administration’s HOPE NOW alliance. The HOPE NOW alliance made 179,500 loan modifications over the first quarter of this year. In essence, for every one loan servicers modified, they auctioned off or foreclosed on two others.
These foreclosures continue to put downward pressure on local house prices and emphasize the need for neighborhood stabilization policies such as CAP’s GARDNS proposal, which calls for federal funds to purchase bank-owned properties at a steep discount, rehabilitate them, and offer them for sale as affordable housing.
The Senate, with solid bipartisan support, provided $4 billion in neighborhood stabilization funds as part of its Foreclosure Prevention Act. On the House side, Rep. Maxine Waters (D-CA) introduced a bill along these lines that has now passed the House Financial Services Committee and is waiting for floor action. It is crucial that congressional leaders redouble their efforts to find a vehicle to which neighborhood stabilization funding can be attached.