| Title: | MBA Testifies at House Financial Services Committee Field Hearing - Causes and Trends of Delinquencies & Foreclosures |
| Source: | MBA |
| Date: | 8/23/2006 |
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CLEVELAND, OH (August 23, 2006) — On a national level, delinquency and foreclosure rates are currently low. However, in the Midwest, and specifically Ohio,
these rates have been elevated due to a weakened regional economy and the resulting job losses. During a U.S. House of Representatives
Financial Services Committee field hearing today, Michael Fratantoni, Senior Director for Single-Family Research and Economics
at the Mortgage Bankers Association (MBA) delivered testimony on the causes and trends in mortgage delinquencies and foreclosures.
“Though currently low, delinquency and foreclosure rates varied across the country in the first quarter of 2006,” said Fratantoni.
“More specifically, the Midwest has maintained the highest rates of foreclosures, due to the continuing decline of jobs and
relatively weak housing markets as well as the high level of homeownership in the Midwest.”
MBA testimony included:
- The same economic factors that have caused mortgage delinquencies and foreclosures throughout history continue today, such
as job loss, illness, divorce and other unexpected challenges. In Ohio, job loss, specifically in manufacturing, has become
a major contributing factor to the rate of mortgage delinquencies and foreclosures. Due to ongoing productivity growth and
increasingly strong global competition, it is likely that manufacturing employment will remain soft in the coming years.
- Every party to a foreclosure loses – the borrower, the community, the investor and the mortgage lender. Profitability for
the mortgage industry rests in keeping a loan current and, as such, the interests of the borrower and lender are aligned.
Therefore, mortgage lenders have a significant incentive to prevent foreclosures. According to MBA data, on a national basis,
mortgage lenders loss mitigation efforts help 3 out of 4 borrowers in the foreclosure process avoid a forced foreclosure sale.
- A fundamental fact regarding mortgage pricing is that different borrowers get different mortgage rates that are based on objective
credit criteria. The Federal Reserve recently confirmed that objective credit variables account for the overwhelming majority
of pricing disparities.
- Financial education is key. Prospective homeowners need to educate themselves and should take advantage of the highly competitive
nature of today's mortgage industry. In fact, MBA hosts a financial education website that is a comprehensive, unbiased resource
for prospective homebuyers, www.homeloanlearningcenter.com .
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The Mortgage Bankers Association (MBA) is the national association representing the real estate finance industry, an industry
that employs more than 370,000 people in virtually every community in the country. Headquartered in Washington, D.C., the
association works to ensure the continued strength of the nation's residential and commercial real estate markets; to expand
homeownership and extend access to affordable housing to all Americans. MBA promotes fair and ethical lending practices and
fosters professional excellence among real estate finance employees through a wide range of educational programs and a variety
of publications. Its membership of over 2,400 companies includes all elements of real estate finance: mortgage companies,
mortgage brokers, commercial banks, thrifts, Wall Street conduits, life insurance companies and others in the mortgage lending
field. For additional information, visit MBA's Web site: www.mortgagebankers.org.