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Record High Foreclosures - U.S. Foreclosures Continue To Set Record Highs


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Record High Foreclosures
 



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Record High Foreclosures

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<% End If%> ATLANTA - Atlanta foreclosures have just hit a new high, causing experts to comment once again that the sub-prime mortgage lending issue is still far from over.

Statistics in October which were released this Monday by Equity Depot, based in Alpharetta, stated that around 6,809 homes in around thirteen counties are in the process of being auctioned due to foreclosure. This is a massive thirty-eight percent rise over September, and an even bigger increase of 49% over the same month last year.
 

The total figure in net value of properties in the process of foreclosure in Atlanta has crossed one billion dollars! Barry Bramlett, an Equity Depot vice president said that “This is the largest swing we have ever seen from month to month”.

These statistics include those foreclosure properties filed in November as well as those which have already been served with legal notices to make it in time to go to foreclosure next month.

Bramlett commented that high interest rate mortgages or sub-prime loans are causing this growth in foreclosures in metropolitan Atlanta. These adjustable rate mortgages make up around 50% of foreclosure notices in 2007. “It truly looks like a sub-prime mortgage problem” Bramlett said. “We’re not seeing that many prime mortgages.”

For every four homes in metro Atlanta, one homeowner has depended on “sub-prime” mortgages. This has been an emerging trend over the last few years. These loans have a higher interest rate than normal loans, and are offered to those who don’t have good credit or have poor credit, or insufficient money to put down for a down payment.

 
It has been seen that sub-prime loans are likely to fail more than 10 times as compared to prime loans. Largely driven by interest rate resets in these adjustable-rate mortgages, experts anticipate that this will cause a further hike in foreclosures in the next three months, as homeowners will find it difficult to meet their monthly installments.

A Georgia Tech professor, Dan Immergluck, who is an expert on foreclosures, said
“Now that we are at this kind of quantum level up in terms of foreclosure activity, I think we’re going to start really seeing the effects on housing prices”.

Prices of real estate California and Florida already have declined, affected by this rise in the number of foreclosures. It is likely that a decline in prices will also take place in Atlanta, where foreclosures are already making more homes available in the market at a point in time when there is a slack in demand, Immergluck said. He also said that he feels that government action is required, especially to aid new buyers in getting a loan.


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U.S. foreclosures continue to set record highs

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The Mortgage Bankers Association said Thursday that the percentage of mortgages in foreclosure hit a record high in the fourth quarter, while mortgage delinquencies reached the highest point in 23 years.

A record 2.04 percent of mortgages in the United States were in some point of the foreclosure process by the end of the year, the trade association said.

At the same time, a record high of 0.83 percent of loans entered foreclosure during the same period.

Homeowners missed more payments, as 5.82 percent of loans were reported past due during the quarter, reaching the highest delinquency rate since 1983.

RELATED STORY:
Ohio foreclosures lead nation

CINCINATTI, OH. - The percentage of mortgaged Ohio homes in foreclosure climbed to nearly 3.9 percent at the end of 2007 – once again the highest in the country and almost twice the national rate, according to a survey released today by trade group the Mortgage Bankers Association.

Ohio had 3.7 percent of its home mortgages in foreclosure at the end of September.

The state’s pipeline of potential new foreclosures – total new delinquencies not yet in foreclosure – also notched up to nearly 7.7 percent, up from 7.2 percent a month ago.

The only bright spot noted by the Washington, D.C.’s chief economist Doug Duncan was total delinquent loans and foreclosure start rates appear to be leveling off, though they remain at high levels.

He said a tough economy and falling home values in the Buckeye State as well as Michigan have combined to push more homeowners over the edge.

He noted homeowners with little equity in their homes that see it wiped out by falling prices have less ability to refinance and less incentive to try to keep their homes.

“In Michigan and Ohio, it’s caused by a collapse of demand,” Duncan said in a conference call with reporters.

Kentucky also saw the rate of its mortgaged homes in foreclosure inch higher to 2.3 percent at the end of 2007, up from 2.1 percent three months earlier.
 

Total delinquent loans not yet in foreclosure also increased to 6.8 percent, up from 6.2 percent in the fall.

Nationally, Duncan said the country’s delinquency rate of just over 5.8 percent has yet to overtake 1985’s record of nearly 6.1 percent.

Still, he said the rate of mortgages in foreclosure just over 2 percent - up from 1.7 percent three months ago - and the 0.83 percentage of outstanding mortgages falling into foreclosure during the last three months of 2007 were both new records since the trade group began tracking the data in 1972.

Duncan said the nation’s foreclosure crisis likely won’t peak until at least the middle of 2008. He added that a potential recession and slipping home values will only make the problem worse.

“As long as home prices are declining, you should see a rise in foreclosures – if you see a recession, it will have the same impact,” he said.

Duncan said recent interest rate cuts by the Federal Reserve will help blunt the price shock of adjustable rate mortgages resetting.

He noted a key index used for setting adjustable rates for ARM loans, the six-month LIBOR rate, has declined 2.5 percent in recent months.

 

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