Posted on Monday, February 14, 2011
Nobel Prize-winning economist Joseph Stiglitz said another 2 million foreclosures are expected in the U.S. this year, adding to the 7 million that have occurred since the economic crisis of 2008.
“U.S. foreclosures are continuing apace,” Stiglitz told a conference near Port Louis, the capital of Mauritius, today. “A quarter of U.S. homes are underwater.”
The number of U.S. homes worth less than their outstanding mortgage jumped in the fourth quarter as prices fell and lenders seized fewer properties from delinquent borrowers, Zillow Inc. said in a report today.
About 15.7 million homeowners had negative equity, also known as being underwater, at the end of the year, up from 13.9 million in the previous three months, the Seattle-based real estate information company said. The total represented 27 percent of mortgaged single-family homes, the highest in Zillow data dating to the first quarter of 2009.
“Americans today are worse off than they were 10 to 12 years ago,” Stiglitz said. At the same time, the U.S. faces “increasing inequality”, with the “upper 1 percent controlling 40 percent of wealth. Instead of trickle down, it has trickled up.”
Foreclosures slowed in the fourth quarter as lenders including Bank of America Corp. and Ally Financial Inc. halted some home seizures after accusations they used improper documentation and processes. Attorneys general in all 50 states are investigating the practices.
The booming economies of Asia are “too small to be the engine of recovery for the U.S. and Europe,” Stiglitz said. “They cannot make up for the deficiency.”
By Kamlesh Bhuckory, BLOOMBERG