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Who Knew?

New Clues on Foreclosures

Negative equity was most important factor.

There's new evidence on what caused the foreclosure crisis—and it may not all fall on the shoulders of subprime lenders. A new study from a database of millions of individual loans suggests the most important factor was whether a homeowner had negative equity in their home, and that the balance of the mortgage was greater than the value of the house. So-called "liar loans" had almost no impact on foreclosures, the Wall Street Journal's Stan Liebowitz reports, and the most important factor was "whether or not the homeowner currently has or ever had an important financial stake in the house."

Read it at The Wall Street Journal

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