Friday, October 14, 2005

'Easy Money' Drives Defaults

A pair of reports find more housing markets with debt problems. "There are 830 Tarrant County homes posted for foreclosure at the Nov. 1 auction, a 4 percent increase from the same month a year ago. With one more month left in the year, there have been 9,333 Tarrant County foreclosure postings, a 5 percent increase from a year ago."

"There is no economic bright spot that would indicate foreclosure numbers are headed downward in the near future, experts said. They pointed to homebuyers squeezing into homes with the lower payments on an adjustable rate mortgage, interest-only loan or mortgages that roll closing costs into the loan. As the interest rates rise, as they are already starting to do, the adjustable rate mortgages will ratchet upwards."

"'The reasoning is the same as we saw six months ago,' said George Roddy Sr. 'A lot of the factors point to the ease of getting money and the ability to refinance more than the selling cost.'"

"People are also running into trouble by buying houses and having little or no money saved in escrow, said Jim Brown. At the end of the year, the tax bill comes due and many people are taking out new loans to raise the money for the tax shortfall. Lenders used to never allow borrowers to waive the escrow; now they do, Brown said. 'I never thought I would see the day when the lender would waive the requirement for the escrow,' he said."

And in Ohio. "Vacant houses have popped up across Northeast Ohio, raising concern about the future of neighborhoods and communities. Many of the homes end up in foreclosure. Cuyahoga County is No. 1 in foreclosures in a state that is among the nation's leaders. Ohio also ranks high in the number of foreclosures involving subprime, or high-interest, loans."

"With the number of new foreclosure filings in Cuyahoga County on pace to top 12,000 this year, public officials and others have clamored for reforms to clear up a logjam of cases."


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