Monday, February 05, 2007

North Carolina Defaults Up "Three-Fold"

The Kinston Free Press reports from North Carolina. "Ten years ago, Carolyn Craig, a real estate broker in Kinston showed no foreclosed homes to prospective buyers. Last year, she had 19 on her for-sale list. Her experience mirrors the trend in Lenoir County, where foreclosures jumped from 80 in 1997 to 270 last year. In Lenoir County, the need for housing after the flood of 1999, and the willingness of some lenders to take advantage of an emergency, put people into newer, bigger and more costly homes than the ones they replaced.

"'Certain lenders will pay off your credit cards to help you reduce your debt and increase your credit score in order to get you in a home,' Craig said. 'It wouldn't be so bad, but because the credit card isn't closed, it provides people with a false sense of money they have, and they are more likely than not to go out and spend it.'"

"Attorney George Jenkins agreed. 'I can't give you specific numbers, but yes, we did have significantly more lenders here, especially after Hurricane Floyd, that are no longer here,' Jenkins said. 'Some of these lenders were responsible for placing people in homes they couldn't afford.'"

"The chief mechanism for getting at-risk buyers into a home, however, is the sub-prime loan. It is also the easiest way for homeowners to get into trouble with lenders, experts say. They blame such lending practices for the dramatic jump in foreclosures, up three-fold in the state in the past eight years."

"Margaret Wood, mortgage lender at First South Bank in Kinston, said interest rates on these loans typically range about 2 percent higher than traditional loans, but can go higher."

"'I often tell people that they really need to use the two or three years they have before their interest rates increase to pay down their credit cards and get their finances under control, to use this short period of time they have as an opportunity,' she said."


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