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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsExpanded jobless benefits prevented more than 1 million foreclosures
Rather than shoving jobless homeowners through underperforming federal programs that aim to reduce mortgage payments, new research suggests a simpler solution to support troubled families: Give them more money.
By helping families make their debt payments, expanding unemployment-insurance benefits cut the likelihood of mortgage delinquency, and prevented about 1.4 million foreclosures between 2008 and 2012, a team of researchers at the Federal Reserve and Northwestern University wrote in a report titled Positive Externalities of Social Insurance: Unemployment Insurance and Consumer Credit.
This finding implies that unemployment insurance played an important role in preventing mortgage default during the Great Recession, despite neither being targeted at mortgage borrowers nor being promoted as a housing policy, according to the working paper from the National Bureau of Economic Research, a Cambridge, Mass.-based organization.
Those 1.4 million avoided foreclosures (the papers Table VII shows the annual number of prevented foreclosures) represented a large chunk of distressed properties during that time period. About 5 million foreclosures were completed between 2008 and 2012, according to data from CoreLogic, an Irvine, Calif.-based analysis firm.
There were other benefits from jobless benefits, too, researchers found. Banks who saw a lower default risk expanded credit access. Mortgage investors lost less than they otherwise would have. Local governments took a smaller hit.
Also, more owners hanging onto their properties meant that homes stood a better chance of not falling into disrepair, which in turn would have sunk property values in their neighborhoods.
Policies improving borrowers ability to pay can be effective in reducing delinquency risk, even among those with incentive to strategically default, researchers wrote. [Unemployment-insurance] extensions during the Great Recession created a substantial welfare gain, especially in light of evidence that the extensions created minimal distortions to job search.
One party is helping Americans and boosting the American economy. One party is holding it back out of spite.
IronLionZion
(45,447 posts)this is good stuff goddamnit. No one likes my threads
chervilant
(8,267 posts)Meanwhile, this data just goes to show:
The uber wealthy KNOWS what will work, they just don't care to share their wealth in ANY WAY.
R B Garr
(16,954 posts)that there will be less foreclosures they can snap up for their portfolios. That may be another motivation for their spite -- the sharks saw the blood in the water and were waiting for their bits of chum to start settling at the bottom.
Their excuse would be the personal responsibility tripe, and just get a another job, etc., but maybe it's just plain greed on their part.
Good news for those who have struggled and were able to hang on, although many of those properties might still may be overvalued and not worth hanging on to, but that's another thing altogether.
IronLionZion
(45,447 posts)who view real estate as a way to park their money.
But yes, the benefits made a difference to those who were just barely hanging on with only their house left. If the benefits helped them, then depending on where it is and what shape its in, their house may have kept its value or appreciated by now. In addition to providing some stable living for their families in an unstable world.
Its astonishing that so many conservatives don't believe that our economy is driven by consumer demand. I wonder where they think benefit money goes?
Omaha Steve
(99,653 posts)K&R!
OS
BainsBane
(53,032 posts)Even if they don't always say what you want to hear on the TeeVee.
chervilant
(8,267 posts)Thanks for this info. (I used to be in mortgage lending, and refused to sell subprime loans. Even then most of us could see the writing on the wall--but too many opted to make obscene amounts of money--e.g. 2-3 times higher commissions--anyway.)
bigtree
(85,996 posts). . . god, we need this right now.
I need this right now (full disclosure, 3 wks. out from the end of my allowance).