Preventing Foreclosures

As recently reported in the New York Times, a new study indicates that during the recession emergency extensions of unemployment benefits did more to prevent mortgage defaults than government programs designed to slow foreclosures by reducing monthly payments. The study estimates that between July, 2008 and December, 2012 $250 billion was paid out in federally funded unemployment benefits which prevents approximately 1.4 million foreclosures.

Moreover, by preventing the foreclosures over $70 billion in social costs were saved, including tyne cost of foreclosure transactions as well as property depreciation and the lowering of property values. Not surprisingly, the extended unemployment benefits helped low and middle-income homeowners the most.

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