Current regulatory policy is not addressing the primary
cause of foreclosures. CoreLogic’s deputy
chief economists Sam Khater says, in an article on the company’s blog, that,
while lack of equity has long been known to play an important role in loan
defaults in general, CoreLogic is the first to specifically examine leverage in
the residential lending sector. The study
comes at a time, he says, that policy makers have been attempting to loosen
lending by reducing the price and expanding the quantity of low down payment
real estate credit.
The company looked back over five decades to examine the
role leverage plays in mortgage foreclosures.