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ABI Podcast Equity-Stripping Led to Foreclosures According to New California Study

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ABI PODCAST:
EQUITY-STRIPPING LED TO FORECLOSURES, ACCORDING TO NEW CALIFORNIA
STUDY


size='3'>July 22, 2009
size='3'>Alexandria, Va. – The latest
American Bankruptcy Institute podcast features a conversation between
ABI Executive Director
size='3'>Sam Gerdano and
face='Times New Roman' size='3'>Michael LaCour-Little
size='3'>, Professor of Finance at California
State University at Fullerton, about LaCour-Little’s recent study
that found borrower behavior, such as equity-stripping and multiple
liens, is a principal culprit in spurring foreclosures, even more than
market forces. The research refutes much of the current dialogue
onCapitol Hill that is geared toward protecting homeowners from
foreclosure.To listen to the interview, please visit
href='http://podcast.abiworld.org/'>
size='3'>http://podcast.abiworld.org/
size='3'>.

Prof. LaCour-Little’s
study, titled “Follow the Money: A Close Look at Recent Southern
California Foreclosures,” calls into question the proposed
policies aimed at helping prevent homeowners from foreclosure. The study

looked at a sample of over 4,000 foreclosure proceedings from November
2006-08 in Southern California, the epicenter of the U.S. foreclosure
crisis. Some of the key findings of the study include:

  • Defaulting borrowers did not
    purchase at the top of the market in 2006. (The average acquisition year

    was actually 2002 with many acquisitions made in the 1990s.)

  • Most (52 percent) had already
    refinanced at least once.
  • 79 percent had a second
    lien.

The study found that borrowers
extracted nearly eight times the amount of equity from their homes
(nearly $2 billion) as they invested in their homes ($262 million).
Losses to lenders, however, would likely total around $1.0, according to

the study.

LaCour-Little concluded
from his samples that the economic losses of the
housing boom have been incurred by lenders, not borrowers, whose
extensive use of debt in response to rising house prices and liberal
credit availability appears to have led to the rising tide of
foreclosures.

The ABI World podcast provides
listeners the flexibility to enjoy the podcast from a computer or to
download to their digital audio player for listening on-the-go. A new
podcast will be available periodically on the ABI World Web site
featuring a conversation with a prominent figure in bankruptcy
law.

To access the ABI World
podcasts, follow the link below:

http://podcast.abiworld.org/

###

ABI is the largest multi-disciplinary, nonpartisan organization
dedicated to research and education on matters related to insolvency.
ABI was founded in 1982 to provide Congress and the public with unbiased

analysis of bankruptcy issues. The ABI membership includes more than
12,000 attorneys, accountants, bankers, judges, professors, lenders,
turnaround specialists and other bankruptcy professionals, providing a
forum for the exchange of ideas and information. For additional
information on ABI, visit www.abiworld.org. For additional conference
information, visit
href='http://www.abiworld.org/conferences.html'>
color='#0000ff'>http://www.abiworld.org/conferences.html.