Industry NewsMortgage

Mayors predict foreclosures will have dire impact on cities

Report urges lenders to engage in workouts with borrowers

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Property values will decline by $1.2 trillion in 2008, denting consumer spending, property tax revenues, job creation and economic growth, according to an economic impact report released today by the U.S. Conference of Mayors. Meeting in Detroit -- one of the cities hit hardest by foreclosures -- the group said that weaker market demand and large inventories of homes for sale would have reduced home values by $676 billion in 2008. With the added impact of the foreclosure and mortgage crisis, home values are projected to fall an additional $519 billion, the report said. The U.S. Conference of Mayors said the report, prepared by Global Insight Inc., demonstrates the need for lenders to modify loan terms of borrowers who have the ability to pay if they had not been placed in risky adjustable-rate mortgages. The Mortgage Bankers Association maintains that economic issues like unemployment -- not risky loans -- are the primary driver of foreclosures in "rust belt" states like Indiana, Ohio ...