Contact: Bruce Mirken, Greenlining Institute Media Relations Coordinator, 415-846-7758 (cell)
Today’s weak jobs numbers — 54,000 new jobs created, a sharp drop from recent months and below economists’ projections – underscore the need for much more aggressive foreclosure relief efforts centered around reducing the principal of underwater mortgages, policy experts at The Greenlining Institute said today.
The new jobs data come on the heels of a succession of grim economic reports, including a sharp May decline in consumer confidence and a drop in the Case-Shiller 20-City Home Price Index to a new post-bubble low. Recent data indicate that 28 percent of home sales are now foreclosures, the highest level in a year, while one quarter of mortgages are “underwater,” meaning borrowers owe more than the home is worth. In some areas, underwater rates of up to 80 percent have been reported.
“This is an emergency,” said Greenlining Institute Community Reinvestment Director Preeti Vissa. “The ongoing foreclosure crisis is well on the way to dragging the whole economy into a double-dip recession if strong action isn’t taken immediately.”
The continuing flood of distress sales, Vissa noted, is depressing home values, making it difficult for workers to relocate in search of job opportunities and damaging vast sectors of the economy that depend on housing. “There is no economic stimulus more effective than a strong housing market, which ripples through almost every sector of the economy,” Vissa said. “Effective foreclosure relief based on principal reduction isn’t just help for people struggling to keep their homes, it’s a vital lifeline for the whole economy. We can’t wait any longer.”