Mortgage defaults continue their upward trend across the country.
The Midwest has been hard hit this year, with Michigan and Ohio together recording 45,000 mortgages entering foreclosure for the first quarter of 2006. Michigan had an increase of 91% in defaults when compared to the fourth quarter of 2005. Ohio saw a 39% increase. Both states have been hard hit by automotive industry job losses.
In Illinois, nearly 13,700 properties entered foreclosure, up 32% when compared to last year's fourth quarter, according to RealtyTrac Inc.
On average, the U.S. is experiencing a 38% increase in mortgage defaults. This marks a larger increase than in any quarter of last year, said RealtyTrac statements.
Many of the defaults have been blamed on corporate downsizings and other job losses. In some cases there are health related issues. Americans in general are exhibiting increasing debt levels, making rising interest rates a factor.
Adjustable-rate mortgages are also to blame for many foreclosures. In the past five years, the booming housing industry led to many homebuyers stretching themselves to purchase a home. Now that rates are adjusting upwards, the homeowners are unable to stretch any further to afford the new payment amounts.
"The increases we've been seeing in foreclosures don't even reflect the worst-case scenario that could happen when the $2.7 trillion in adjustable-rate mortgages are reset over the next 18 months," explained Rick Sharga, vice president of marketing at RealtyTrac.
Alexis McGee, president of Foreclosures.com, says that while mortgage defaults and foreclosures are at a high, historically they remain low.
"It's a big jump, but from very, very low numbers on a historic basis," she explained.
Some experts and federal regulators consider loose lending policies as a potential cause of the upward foreclosure trend. Some financial institutions have recently been making mortgages available to those who barely qualify.
"People think they have to losen their restrictions, their guidelines, their policies," said William Gooch, chief executive of Community Bank of Elmhurst in Illinois. He explains that the increase in mortgage brokers has led many banks to consider looser standards to compete.
Foreclosure proceedings usually begin after a borrower misses at least three mortgage payments. The lender files for a judgment through the courts. It usually takes seven months from filing to the auction of the property. During that time, the homeowner can sell the property or catch up on the payments.
In many areas, several people in a movie theatre could be going through foreclosures:
According to first-quarter 2006 reports by RealtyTrac, the following households fall into foreclosure:
1 in 69 households in Indianapolis
1 in 70 households in Atlanta
1 in 99 households in Dallas-Ft. Worth
1 in 101 households in Memphis
1 in 105 households in Denver
Martin Lukac(http://www.MartinLukac.com), represents http://www.RateEmpire.com and http://www.1AmericanFinancial.com, a finance web-company specializing in real estate/mortgage market. We specialize in daily updates, rate predictions, mortgage rates and more. Find low home loan mortgage interest rates from hundreds of mortgage companies!
