Foreclosures Soaring; What Recovery?
September 15, 2014 • 10:02AM

The last few months have seen a dramatic rise in foreclosure auctions, hitting the Northeastern United States particularly hard, but extending throughout the country. While experts try to explain this as just part of the “messy business of cleaning up the distress” lingering from the 2008 housing bust, the reality is that this offers further evidence that the Obama “recovery” is non-existent.

In New York, the August figure of 618 foreclosure auctions was the highest monthly total since October of 2010. In New York and Connecticut, foreclosures soared 81% in August, compared to a year earlier, the New York Post reported today. The explanation? “The shift toward low-wage jobs as the local economy has recovered is putting home ownership out of reach for many New Yorkers.... When you’re thinking about people’s ability to afford their homes ... overall wealth is not keeping up with ... the job picture,” said Adam Kamins, economist at Moodys Analytics

Statistics elsewhere in the country are equally dramatic. The Philadelphia Business Journal reported Sept. 11 that foreclosure starts in New Jersey had skyrocketed in August, increasing by 115% year-on-year; scheduled foreclosure auctions increased by 71% compared to a year ago, to the highest level since July 2010. In Maryland, August foreclosures increased by 20% year-on-year. According to RealtyTrac, the state’s August foreclosures were up 71% from July, and at that point, Maryland had experienced two straight years of rising foreclosures.

In Colorado, foreclosure auctions were up by a whopping 160%, and in Oregon, they increased by 117%.

Against this backdrop, a Sept. 9 article in The New York Times is revealing. Under the headline, “Are Subprime Mortgages Coming Back?” author Binyamin Appelbaum suggests that “it might be time for the revival of the subprime-lending industry” by loosening standards on mortgage lending, which he claims are now excessively strict, and hurting the overall economy. After all, he says, long before these risky loans were blamed for helping to usher in the 2008 financial crisis, they were “embraced as a promising antidote to the excessive caution of mainstream lenders.”