"Sean O'Toole likes to talk about foreclosure “myths.”
The founder of ForeclosureRadar, which tracks default trends,
appeared before the Sacramento Association of Realtors on Tuesday and
offered what he called a contrarian view of the housing crisis. The
first myth: “Foreclosures are evil.”
Not true, O'Toole said. Foreclosures did not cause prices to fall.
They don’t cause neighborhood blight, and there is not going to be a
tsunami of new foreclosures in 2013.
The housing bubble, he said, was actually a credit bubble, with crazy
loans. “It was cool to have a 5-1 interest only adjustable rate
mortgage,” he quipped. Those loans allowed people with moderate incomes
to afford way too much home, fueling the housing bubble. A price pop was
inevitable he said, although he acknowledges foreclosures accelerated
the downward slide. That said, the rubble is being cleaned up more
quickly because prices are so low, he contends."