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Harvard Scholar Says Atlanta Foreclosures One of Highest

Posted on 29 November 2008 by Carl Martens

Atlanta is among the nation’s hardest-hit markets for foreclosures according to a Harvard University scholar.  The large numbers of subprime loans, extensive mortgage fraud, and large quantities of housing stock are the identified causes of this current increase.

Mark Duda, the Harvard researcher who is analyzing national foreclosure trends for a study sponsored by the Fannie Mae Foundation, said Thursday that the high foreclosure rates produced by failing subprime loans are costing communities millions of dollars in hidden losses.

“When there’s a foreclosure, it causes other problems,” Duda said.

Properties surrounded by foreclosures will often see their property values decrease as a result.  This is largely in part due to the increase in crime in these concentrated areas where foreclosed and vacant structures seem to promote criminal activity.

In Georgia, failing subprime loans also boost the per capita rate of Chapter 13 bankruptcy filings to three times the national rate. The state’s short window between the declaration of foreclosure and seizure of the property sends many homeowners to bankruptcy court to stop the sale while they attempt to restructure their debt, Duda said.

Maps compiled by Duda as part of his study, which will be released nationally early next year, show growing concentrations of foreclosure spreading “like a virus” through metro Atlanta between 2001 and 2007, he said.

Using data provided by the Atlanta Foreclosure Report, Duda’s maps show high percentages of foreclosure, especially in the southern portions of DeKalb and Fulton counties and the city of Atlanta.

Duda said repairing problems with subprime lending will be challenging.

“There are lot of structural problems with subprime lending itself that are going to make it difficult to solve,” Duda said.

The Harvard researcher will join U.S. Treasurer Anna Escobedo Cabral in a forum sponsored by the Consumer Credit Counseling Service of Greater Atlanta and NeighborWorks America at the Commerce Club, 34 Broad St., NW, in downtown Atlanta at 8 a.m. Friday. The pair will discuss foreclosure and efforts to stem its growth in Atlanta and nationwide.

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