Foreclosure Crisis Worsens

September 20th, 2007

In Ohio the picture is grim. National trends are scary. In central Ohio last month 2,930 houses were listed for foreclosure. It was indicative of a 37.6% jump from July. In Ohio state 17,793 units entered foreclosure. The state now ranks 5^th. The increase from July was 33.6% and 138% from August 2006. However Ohio has initiated remedial measures. The lead comes from Governor Strickland. He was addressing primarily the sub-prime mortgage sector.

The recent jump in foreclosures numbers is just the tip of the iceberg. More is in store as a great number of sub-prime rates are just about ready to reset and rise. Across the nation a total of 243,947 filings were listed in August. It was a 115% rise from what it was in the same month in 2006, when 113,300 foreclosures had been recorded. In July there were 179,599 foreclsoure listings.

The numbers include default as well as auction sale notices together with those for bank repossession. Thus one unit may have been counted more than once if it has multiple mortgages tagged to it. The month of August has been marked as a record breaking one because as yet no single month has had the dubious distinction of such high foreclosure numbers.

Why and when does this malaise strike? The usual culprits are illness and unemployment but with so many numbers in the fray the main reason seems to be the bungling of the sub-prime mortgage fiasco. The predatory tactics of lenders coupled with the greed of borrowers have led to this imbroglio, which is sending ripples across the globe. Specifically those sub-prime loans that were kicked off in 2005 and 2006 have started the game. At that time the housing sector was in tizzy and ballooning up. The teaser rates were scheduled to be reset in only two years. It is a bunch of rogue loans that are gnawing into the system.

As part of the remedial measures non-profit organizations with the backing of the government are being proactive by alerting faulting borrowers as soon as they fail two times in making payments.

It is anticipated that the crisis will not peak off till 2009. Government is planning to introduce federally backed mortgages. Low and middle-income groups will benefit by being enabled to refinance their loans. The step exceeds those of the Bush-Plan. The senate sanctioned $200 million as aid.

via