This week, a recent report from the Mortgage Bankers Association, shows 1.2 plus, million households have been lost in the recession. This number is based on data between 2005 and 2008 and does not include any information from last year—when the number of foreclosures rose.
According to the study, conducted by professor, Gary Painter from the University of Southern California, the number of overcrowded households (more than one person per room) has increased five times. It’s no secret the homeownership rate is dropping steadily, nationwide. Renters have been forced to move in with family and friends. This explains why US apartments remained at 8% within the first quarter—according to a recent report from Reis, a real estate research firm, the highest level since 1986.
As well, homeownership numbers continue to drop. Roughly 300,000 foreclosure filings are made monthly. And according to Fannie Mae Chief Economist, Doug Duncan, there are presently, approximately, 5 million homeowners, 90 days or more, past due on their mortgages. Lenders are scrambling to fix bad loans and mortgage defaults.
Surprisingly, millions of homeowners, who are current with their mortgages, owe way more than their homes are actually worth. And despite the government’s newest guidelines encouraging lenders to reduce the principal owed on loans, this process is primarily voluntary. Getting lenders to comply is another issue entirely. But at least the effort has been made on the part of the government.
Sadly, since so many lenders have been remiss in cutting the mortgages in order to make reasonable, monthly payments, numerous homeowners and their families are simply leaving their homes. “Strategic defaults,” as they’re called, though harmful to borrowers’ credit scores, are becoming the trend.
Consequently, another recent study conducted by the Department of Housing and Urban Development shows family homelessness on the rise in suburban and rural areas, since the recession.
“The limited existing research tells a story of increasing homelessness among adults ages 50 and older,” reported the National Alliance to End Homelessness.
The number of new households is projected to rise in roughly two years from now, according to the recent MBA report. It’s interesting to note, from 2005-2008, the 1.2 million homes lost, were lost while the population grew by approximately 3.4 million.
Fortunately, though slowly, the government is finally working on ways to better assist homeowners and borrowers. The amount of time spent and sensitivity to owners, is what lenders and the government must focus on now.