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» STUDY FINDS VIOLENT CRIME AFFECTS HOME PRICES Analysts say a reduction in homicide rates by 10 percent could lead to a 0.83 percent increase in housing values and a 2.1 percent increase in home prices in residential and metropolitan areas around the nation. The Center for American Progress surveyed eight major metropolitan areas to tally up the costs of violent crime—including homicide, rape, and aggravated robbery—for residents, cities, and state and municipal governments. According to the study, the results weigh heavily on residential property values and home prices. For example, a 10 percent reduction in homicides could drive up the value of residential real estate by billions, including Boston ($4.4 billion), Philadelphia ($3.2 billion), Seattle ($2.9 billion), Dallas ($2.4 billion), and the Chicago area ($2.2 billion). The study claimed that current property tax rates would couple with property value increases to "substantially expand the revenues from property taxes" in surveyed cities. Marc Morial, president of the National Urban League and onetime mayor of New Orleans, participated in a teleconference call to address the results. He linked "easy access to guns and the proliferation of illegal guns" to the "corrosive effects" of violent crime on residential real estate, state and municipal budgets, and quality of life for residents. The study highlighted the differences played by handguns and other weapons, laying the onus of the problem on the former. Of 94 percent of homicides committed by assailants with weapons, for example, analysts found that 67 percent used handguns. Morial sided with the analysts in calling for a combination of targeted policing and social service programs to draw down the amount and impact of violent crime. He cited his own tenure as mayor between 1994 and 2002, recommending more state and federal funds for police departments, criminal justice systems, afterschool programs, and youth recreational activities. "Those investments could, in fact, bring about a return on investment" in the form of "increased property values, lower crime, and thus an improved economy," he said. VISIT US ONLINE @ DSNEWS.COM DELINQUENT HOMEOWNERS MORE NEGATIVE THAN UNDERWATER GROUP: SURVEY Delinquent borrowers who responded to Fannie Mae's National Housing Survey for the first quarter of 2012 expressed more negative viewpoints toward homeownership and paying their mortgage compared with underwater borrowers and those who have seen their home values decline. The data was collected to learn more about the attitudes of the delinquent borrower population that is oftentimes difficult to reach. A much higher percentage of delinquent borrowers have considered stopping their mortgage payments compared with underwater borrowers and those who have seen their home values decrease. According to the survey, 41 percent of delinquent borrowers said they've considered giving up on making payments, while only 11 percent of those who saw their home values decrease considered stopping and 10 percent of underwater borrowers said they considered giving up as well. Out of all groups, delinquent borrowers were also more accepting of defaulters. When asked if they thought it was okay to stop making payments if one's house is worth less than what is owed, 23 percent of delinquent borrowers said it was OK and surprisingly, only 7 percent of underwater borrowers answered yes. Since its inception in January 2010, the Fannie Mae survey has found the attitudes of underwater borrowers are generally similar to the total mortgage borrower population, which suggests delinquency, not negative equity, is actually a greater influence on a borrower's attitude toward default. "Results indicate that helping keep mortgage borrowers current on their mortgage is a beneficial goal since the negative attitudes resulting from delinquency for the borrower (and those they influence) may be hard to repair and could evolve into ingrained delinquency behaviors," said Doug Duncan, SVP and chief economist of Fannie Mae, in a release. When it comes to borrowers dealing with financial distress, 40 percent of delinquent borrowers said it's OK to stop making payments if one is facing financial distress, while only 20 percent of underwater borrowers said it's OK. In comparison with underwater borrowers and those who have seen their home values decrease, delinquent borrowers are also twice as likely to be stressed about their ability to make payments. For the first quarter of 2012, 82 percent of delinquent borrowers said they were stressed about making their payments, while only 41 percent of those who saw their home values decrease expressed stress and 35 percent of underwater borrowers said they were stressed. The majority of delinquent borrowers (52 percent) are also more likely to rent than buy if they were to move as opposed to underwater borrowers (18 percent) and those who saw their home values decrease (19 percent). Although there was little difference between delinquent borrowers and the general population when it comes to confidence in the economy, delinquent borrowers were especially more pessimistic when asked if they believe home prices will go up. Only 23 percent of delinquent borrowers surveyed answered positively, while 30 percent of the general population said yes. According to Fannie Mae, the reasons underwater borrowers and those who have seen a decline in the value of their home have a similar attitude to the general population is because they are still experiencing non-financial benefits of homeownership such as control, personal security, and the best environment in which to raise children. For the survey, 3,451 telephone interviews were conducted from January 9 to March 28 by Penn Schoen Berland. KNOW THIS Nearly 30% of modifications on mortgages held by private investors included a principal reduction in June, up from 20% in February, according to Fitch Ratings. 29

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