Survey predicts more foreclosures

According to the report, residents of Mercer County “felt the impact of the national housing slump,” generally considered to be the result of both subprime lending practices and the continued decline of residential property values. Across the county, 4.7 percent of owner-occupied mortgage housing units were found to have received a foreclosure notice since 2006. The survey also reported that 4.5 percent of owner-occupied mortgage housing units in the county were behind on their monthly mortgage payments.

Additionally, 11.3 percent of owner-occupied mortgage housing units had “underwater” mortgages, a mortgage arrangement in which homeowners essentially owe more debt on their property than its current market value. This condition tends to arise when homeowners take out more than one mortgage.

Though the collected data might suggest a decrease in foreclosure filings since 2007, the report noted that this is a symptom of ongoing court litigation that has increased the processing time of foreclosure filings, rather than a sign that the housing market is improving.

The survey also noted that the breaking of the housing bubble did not affect everyone in the county evenly, because those who purchased homes during the peak of the market and could more easily obtain mortgages were more likely to receive foreclosure notices.

Ryan Tully, a regional research specialist in the Wilson School, also noted in an email that socioeconomic factors, such as household income and the presence of minority household occupants — especially blacks or Latinos — were associated with disproportionately high rates of foreclosure filings and “underwater” mortgages.

“Blacks and Latinos were systematically targeted for predatory lending,” said Douglas Massey, director of the Office of Population Research and a professor in the sociology department. In response, he proposed tighter financial regulation of mortgage-backed securities and use of financial instruments such as credit default swaps and collaterized debt obligations. He also suggested that civil rights provisions enacted by the Fair Housing Act, Equal Credit Opportunity Act and the Community Reinvestment Act be more strictly enforced.

Dean of the Wilson School Christina Paxson said in an email that it is particularly troubling that low-income and minority families were feeling the full effects of the economic crisis.

“Despite reports that the housing market is rebounding, many in Mercer County are still hurting,” she said, adding that the Wilson School hopes to conduct similar surveys in the future to further investigate the issue.

Tully shared this sentiment, noting that “as a premier research institution and a member of the Mercer County community, the Woodrow Wilson School strives to provide impartial, applied research to the community whenever possible.”

The survey was conducted by mail, web and telephone from Sept. 10, 2011 through Nov. 12, 2011, among a randomly selected sample of Mercer County residents ages 18 and older.