The Foreclosure Report

Foreclosures In RI Fastest Growing In The US

The Boston Globe reports on foreclosures in Rhode Island. "More Rhode Islanders losing their homes as the number of foreclosures on high-risk mortgages increases. Mortgage companies give people with less-than-perfect credit subprime loans that carry higher-than-average interest rates. Rhode Island has the largest portion of subprime loans in the nation. More than one in four mortgages issued to Rhode Islanders in 2003 carried terms that are considered subprime."

"The foreclosure rate on subprime loans jumped 0.41 percent in the third-quarter last year, the largest increase in the nation. Economists and housing experts say the increase is partly due to a slow down in the housing market. When home prices were rising fast, people could take out home equity loans or sell their houses at a profit when they had trouble paying their bills. They are less able to do so now."

"John and Nicole Pilozzi of Cranston know this from firsthand experience. Together, they earn about $69,000 a year. They bought their three-bedroom home in Cranston in April 2000 for $131,000. Their $104,800 mortgage carried a 9.35 percent adjustable interest rate, nearly 3 percent higher than average."

"About 18 months later, interest rates fell, and the couple refinanced, taking out a $123,000 loan at an adjustable rate of 8.57 percent. By the following summer, they had accumulated car loans and mounting credit card bills. In June 2002, the Pilozzis took out a home equity loan of $25,000. They were not alone. About one in four dollars that home owners took out in home equity loans at that time went to pay off other debts, according to the Federal Reserve."

"The Pilozzis refinanced for a third time in February 2004. They rolled their home equity loan into a new $187,000 mortgage with an initial interest rate of 7.08 percent. The $1,600 to $1,700 per month mortgage and insurance payments were crushing. They began missing payments when John was transferred to Massachusetts. Gas cost more than $120 a week, he said."

"In January, the Pilozzis' home was sold at a foreclosure auction. 'I make decent money,' John Pilozzi said. But, 'I just couldn't do it.'"

posted by Ben Jones @ 12:38 PM