Nationwide Foreclosures Are Clustered Into a Few Counties

With the national credit crisis in full swing, it is interesting to note that the wave of housing foreclosures which set the economic downturn in motion occurred in a relatively small geographical percentage of the country. Recent data released by RealtyTrac shows that foreclosures in just 35 counties accounted for 1.5 million foreclosure actions... more than half of the country's housing defaults. Clark County in Nevada, which encompasses the Las Vegas valley and environs, led the list.

How could isolated, regional events trigger a national economic downturn? Most of the nation's major banks and other lending institutions were invested heavily in, or owned subsidiaries that serviced the hard hit areas like Nevada, California, Arizona, and Florida.

The geographical clustering of the nation's foreclosures could have an impact on the recent Financial Stability plan introduced by the Obama administration as well. For starters, the plan may face political challenges because it provides so much money...$75 billion...to help relatively few Americans. In addition, because of its many restrictions the plan may not be able to help the homeowners from distressed areas who need the help most. In order to refinance a loan under the proposed Financial Stability plan, a homeowner must owe less than 105% of the home's current market value. In many of the 35 counties that represent the bulk of the nation's foreclosure wave, home prices have dropped so dramatically that most homeowners won't qualify.