The Foreclosure Report

Subprime Loans Lead To Michigan Foreclosures

The Battle Creek Enquirer reports on burgeoning defaults in Michigan. "The number of foreclosures in Calhoun County has increased more than eight-fold in the past decade, which is consistent with Michigan having one of the nation's highest rates. Easier access to home loans, an increasingly fragile economy and mortgages that are beyond the financial abilities of the borrower are cited as reasons for the climb."

"Freddie Mac reported last year that subprime lending increased 77 percent between 1996 and 2001. In the next two years, it more than doubled, from $160 to $375 billion, the company reported. Subprime mortgages are a growing part of the home-buying market, said Colleen Maire, branch manager for Battle Creek's Amerifirst Home Mortgage. They make up about 35 percent of her business, she said. She expects that to climb to 50 percent next year."

"The foreclosure process, on average, takes a year. Usually, the bank will begin proceedings after the fourth missed payment and the process itself can take two months. Michigan law allows the homeowner an additional six months to make up the payments at that point, which means the bank cannot sell the property until that grace period has ended."

"Audrey Andrews said just recently a woman sent in a list of rates and nobody in the office had heard of a single lender on the list. One of the quotes was for a 51/2 percent, 30-year fixed-rate loan, more than a full percentage point above current rates. Andrews said she has seen people charged exorbitant fees and incur all types of hidden costs by unreputable companies."

"'That's not where the rates are,' she said. 'People need to be very, very wary of trying to get a mortgage over the Internet.'"

posted by Ben Jones @ 11:45 AM