The Foreclosure Report

Low Income Areas Hit Hardest: N. Carolina

The Charlotte Observer reports from North Carolina. "Last year, more N.C. families were threatened with losing their homes through foreclosure than ever before, a new state report shows. Hardest hit were homeowners in Mecklenburg and surrounding counties, where foreclosure filings are among the state's highest and rising fast."

"North Carolina recorded more than 45,500 foreclosure filings in 2006, according to the Administrative Office of the Courts in Raleigh. Mecklenburg County had the highest concentration; 35 per 1,000 homeowners, according to the Observer's analysis. Gaston County was fifth with 27. The N.C. average was 19."

"Foreclosure filings are growing faster in most Charlotte-area counties. They're up 13 percent in Mecklenburg, compared with 6 percent statewide. Experts estimate that about half of foreclosure filings result in owners losing their homes. In Mecklenburg since 2003, it has been at least 40 percent annually."

"Why are foreclosures rising across the state, and especially in the Charlotte area? Certainly, more homeowners are straining their budgets tighter than ever to purchase homes. But growing numbers of new mortgage loans help them do it, experts say, especially high-interest and adjustable-rate subprime mortgages."

"The subprime industry was designed for borrowers with credit problems, and it offers mortgage loans to consumers who couldn't qualify for them in the past. But subprime loans carry high interest rates and are more likely to foreclose. 'These are one-way, exploding mortgages,' says Mal Maynard, director of the Financial Protection Law Center in Wilmington. 'They never drop below the original rate; they can only go up.'"

"Al Ripley, of the nonprofit N.C. Justice Center in Raleigh, says his group typically sees lower-income home buyers whose payments rise suddenly from about $900 a month to about $1,250. 'That's a big jump for most people -- especially when they were barely able to afford the $900-a-month payment to begin with,' Ripley says."

"Subprime loans make up 14 percent of all mortgage loans in Mecklenburg, according to the most recent data. In Wake, the state's second-largest county, it's about 10 percent. Wake, where Raleigh is located, also has far fewer foreclosure filings, 19 per 1,000 homeowners compared with Mecklenburg's 35."

"Another factor may be Mecklenburg's higher concentration of lower-priced homes, which make up a majority of foreclosures. Forty-one percent of Mecklenburg's housing is valued under $150,000, compared with 33 percent of Wake County's, according to the U.S. Census."

"The Observer recently examined Mecklenburg foreclosures from 2003 through early 2006. The findings include: More than 80 percent of foreclosures involve homes valued at $150,000 or less. Most foreclosures cluster on the county's west, north and east sides, where houses and land often carry lower price tags."

"'My business just keeps coming,' says Tony Smith, a Charlotte real estate broker who specializes in foreclosures. 'My best clients are still sending me new assignments every week.'"

posted by Ben Jones @ 6:28 AM