The Foreclosure Report

Atlanta Defaults 'On Track To Double' In 2006

The Atlanta Journal Constitution reports from Georgia. "The number of property foreclosures in metro Atlanta this year is on track to double 2005 foreclosures. Real estate database Equity Depot, recorded more foreclosures in a 13-county metro area through the end of July than were reported in all of 2005."

"'We're just touching the surface of this whole adjustable-rate mortgage problem,' said David Cook, president of Alpharetta-based Equity Depot."

"Georgia laws make non-judicial foreclosures fast and easy and have long helped keep the state high in national rankings. Now, years of easy mortgage credit, including adjustable-rate mortgages, and low interest rates have created a stratum of homeowners vulnerable to a softening housing market or any economic setback."

"Equity Depot's figures show foreclosures in 13 metro counties rose to 25,276 through the end of July 2006, compared with 21,030 for 2005 and 10,956 in 2001. 'Yes, we're seeing what I would say is a substantial increase in the number of homeowners who are struggling to make their mortgage payments due to increased interest payments on their loan,' said Sue Hunt, CCCS housing counseling manager."

"In six months, Hunt said, CCCS has tripled its housing counseling staff, and the agency plans to add more staff to cope with increased demand."

"Those increases are similar to foreclosure jumps being reported nationwide as rising interest rates strain homeowners with adjustable-rate loans and slower housing sales make it harder for troubled households to sell or downsize. But Doug Duncan, chief economist for the national Mortgage Bankers Association, doesn't think the numbers show the whole picture. 'We use the word 'normalizing' to describe what is happening in the housing marketplace today,' Duncan said."

"He said the bulk of conventional, fixed-rate loans are showing no signs of added distress. 'Part of what we're hearing is a result of the fact that there is a huge number of loans out there,' Duncan said. About 25 percent of current mortgage loans nationwide are adjustable, Duncan said."

"Hunt said local consumers are often confused about the potential risk adjustable-rate loans can pose. 'The first explanation we hear from our clients is that they didn't realize or fully understand the terms of the [loan] contract,' Hunt said. 'They knew it would escalate, but they didn't realize how much [more payment] a small increase in the interest rate would generate.'"

"Georgia is a particularly difficult state for homeowners facing foreclosure, Hunt said. State laws allow banks to seize delinquent properties within a matter of months after skipped payments, and the process doesn't require going to court. 'In Georgia, you can go into default and lose your house really, really fast,' Equity Depot's Cook said."

"Hunt, of CCCS, said lenders are aware of a looming problem with delinquencies and foreclosures. She predicts a range of new solutions designed to help troubled consumers will soon hit the mortgage market. 'I think the lenders are going to have some creative ideas to help people get out of this situation,' Hunt said."

posted by Ben Jones @ 1:09 PM