Friday, October 06, 2006

'A Lot Of People Didn't Look To The Future'

The Danvers Herald reports from Massachusetts. "Property foreclosures increased by more than 70 percent nationally for the first quarter of 2006 compared to that of 2005, a trend reflected in Danvers and across the North Shore. Further evidence from the Salem Registry of Deeds shows a significant increase in foreclosed properties in Danvers and other North Shore communities. The North Shore has a high number of foreclosures per community as compared to all 351 cities and towns in the commonwealth."

"Dan Bennett, owner of Dan Bennett Real Estate on Page Street, and others in the real estate mix appear to agree that a combination of factors are responsible for the upswing in the number of foreclosures plaguing the market, beginning about nine months ago. Most attribute the increase to a sluggish economy and a flooded market."

"However, the resounding reason for property owners now falling on hard times is attributed to creative financing - loans offered with little or nothing down and variable interest rates having reached maturity."

"Many people yearning for a lovely, new single-family home took a walk out onto a financial limb a few years back with low, variable rate loans, a decision some same that may not have been well thought out, experts said. 'A lot of people didn't look to the future,' Bennett said."

"Others hoping to own their very own lot of greener grass took advantage of interest-only loans, which in some cases placed them in dire financial straits even sooner. 'There's fine print in some of those loans,' Corbett said. 'I had a customer (with an interest-only loan) who came back to refinance a mortgage for $342,000 only to find out the payoff was at $354,000 nine months later.'"

"John Paskowski, who owns Atlantic Mortgage Group on Elm Street, agreed that many took a risk by engaging in creative financing to purchase property over the past several years without considering all the factors. He attributed this to the economic make-up of Danvers property owners. 'We have lots of blue-collar, two-income families working hard to pull it together for the short-term,' Paskowski said. 'We may now be at the point where it's becoming an issue.'"

"Professional auctioneer Jeff Mann in Holbrook conducts property foreclosure auctions and is on board with the realtors. 'It's a compounded problem,' Mann said this week, 'with a lot of people taking advantage of 100 percent financing. They find out they can't meet those payments. In this market a lot of times we are actually auctioning off property that's worth less than the mortgage.'"

"Many who signed on for lower, 4 percent variable rate loans a few years ago now have reached the point in the terms of their mortgage where they have to lock in a higher fixed rate of at least 6 percent, Paskowski said. 'Adjustable rates are adjusting,' Paskowski said, 'and those who signed up should not be surprised. It is disclosed with these types of mortgages.'"


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