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Stopping foreclosures may NOT be good for the economy

Posted by: Peter Coy on June 11, 2009

I like this piece by Matthew Padilla, who writes the OC Register’s Mortgage Insider blog. He quotes two economists who say that stopping foreclosures is not necessarily a good thing for the economy. Christopher Thornberg of Beacon Economics in Los Angeles tells Padilla that “foreclosures are good for the economy.” How? People who stop paying unaffordable mortgages and lose their homes suddenly have more money to spend on non-housing goods and services. Not such a bad thing, right?

Hat tip to



BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.

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