Foreclosure Crisis: A Reflection Of Downward U.S. Economy

November 14th, 2007

Foreclosure filings are alarmingly on the increase nationwide – over 100 per cent in the third quarter of 2007 when compared to the corresponding period last year. The above news is causing worry among home owners and home buyers. The brighter side of it is that Seacoast home owners of New Hampshire and most of the southern Maine are yet to catch up with this increase, whereas the gloomy part is that Rockingham County and New Hampshire are going the national way.

There may be reasons varied for non-increase of foreclosures in the above areas, cost of living prohibits new settlers; prices of homes not falling as they are in other parts of the nation; the steady price range enables re-financing or other ways out there to escape unhurt from the foreclosure epidemic. The mounting re-adjustable mortgage rates have also not caused much damage in these areas since the values fetched by the homes on sale is more than the loan, sparing the home owners from allowing foreclosures.

However it seems that Seacoast is only delaying the inevitable. The enormous increase in foreclosure filings is spreading fast in all the regions and how much of time is left for Seacoast is a point to ponder. It is reported in the local news papers that Rockingham County turned out a foreclosure figure of 33 as against 19 reported in the same September month of last year. Another data made available proclaims that the State of New Hampshire is also following the national trend by showing a filing of 1,381 as against 653 reported the same period last year.

Financial experts attribute the swelling in foreclosure figures to extending sub-prime loans for people with bad credit history. The adjustable rates of sub-prime lending caused innumerable defaults and they in turn caused the credit crunch. It is estimated that the present sub-prime mortgages numbering 2 million will be reset with higher rates before end of 2008 and this is sure to cause more foreclosures.

For one thing the steps taken by Banks to tighten up the procedures for all mortgage borrowers of traditional and non-traditional mortgages, will be helpful in somewhat reducing the future foreclosures but not those who are already caught into it. Another side of this measure is that the home buyers have to spruce up their credit history as never before if at all they want any mortgage loan.

Via