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Paul Kiesel
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Center for Responsible Lending Foresaw Foreclosure Crisis Back in 2006, Greenspan and Bush Officials Largely Ignored Group’s Findings

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Below is an article from HousingWire.com, written back in December, 2006. The article clearly states that “billions of dollars” will be lost and that the then looming foreclosure crisis will be “one of the worst foreclosure crises in American history.”

Touting a report to be released tomorrow, the Center for Responsible Lending, a Washington, D.C.-based consumer advocacy group, said today that subprime mortgages originated from 1998 through the first half of 2006 will wipe out billions of dollars of economic wealth in what the group characterized as “one of the worst foreclosure crises in American history.”

The CRL will release what it says is the first comprehensive, nationwide look at how subprime mortgages perform, providing projected foreclosure data on all major U.S. metropolitan statistical areas (MSAs).

The report is scheduled to be released tomorrow afternoon during a news conference featuring Michael D. Calhoun, president, Center for Responsible Lending; Pat Vredevoogd Combs, president, National Association of Realtors; and Wade Henderson, executive director, Leadership Conference on Civil Rights. (December 18, 2006)

Just two months prior to the publication of this article, Alan Greenspan, the former Federal Reserve chairman, was quoted as saying on October 9, 2006, “I suspect that we are coming to the end of this downtrend, as applications for new mortgages, the most important series, have flattened out [. . .] There is a good chance of coming out of this in good shape, but average housing prices are likely to be down this year relative to 2005. I don’t know, but I think the worst of this may well be over,” (MSNBC.com, 10/9/06).

Ben Bernanke, the then recently appointed Fed chairman, said that the housing market was undergoing a “substantial correction.” However, he didn’t elaborate any further on what he meant by that statement.

Nonetheless, the writing was on the wall back then and little was done by the current administration to help prevent or prepare the country for the amount of foreclosures we’ve seen over the last 10 months.

There have been over 1.4 million foreclosures throughout the first half of 2008, up 121% from last year. 2.5 million foreclosures are projected for 2008.