Friday, April 07, 2006

Georgia 'Leading The Way' In Foreclosures

The Rome News Tribune looks at foreclosures in Georgia. "Creative financing and low interest rates have helped millions of Americans buy homes in the last three years, but that same financing could force many people out of those homes in the years ahead, in Rome and Floyd County, as well as around the nation. Many of the adjustable-rate mortgages that homebuyers used in recent years are approaching their scheduled resets."

"'You could see higher foreclosures. I think we’re already seeing that,' said Vickie Hill, mortgage sales manager and loan originator in Rome. 'I don’t know how high it will go.'"

"Greater flexibility in mortgage financing, including wider availability of 100 percent home loans, plays a part in the trend, she said. But the problem is aggravated by people who refinance or use home equity loans up to or above 100 percent of the home’s value to pay off other debts."

"An online marketplace for foreclosure properties is already reporting a nationwide increase in home foreclosures, with Georgia leading the way. The company’s most recent report showed foreclosures in February were up 13 percent from January and up 68 percent from February of last year. Georgia posted the highest foreclosure rate in the nation for the second straight month, with one foreclosure for every 329 households."

"First American estimated that all adjustable-rate mortgages that began in 2004 or 2005 with rates below 4 percent are at high risk of default when rates reset. For example, a 30-year loan for $150,000 that began at a 3 percent introductory rate would have required a monthly payment of $632.41 to start. But if that loan were to reset next year to an 8 percent rate, the monthly payment would jump to $1,100.65, a cost increase that many homeowners’ budgets wouldn’t be able to cover."

"Dayna Crumley, branch manager of Market Street Mortgage in Rome, said that many of the recent foreclosures are young homebuyers, who have less experience at managing their personal finances. Crumley plans to start a homebuyers counseling program at her office to help educate people on their finances and what to expect in terms of homeowner expenses. 'You’ve got a lot more first-time homebuyers now than I’ve seen before,' she said."


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