Foreclosures: Connecticut Foreclosure Crisis

Connecticut Foreclosure Crisis

February 25th, 2008

In the coming two years over 20,000 sub-prime mortgage rates are scheduled to reset in Connecticut to higher notches. This will invariably set off another wave of House foreclosures.

The county that is hardest hit is New Haven. Figures show that this region was a happy hunting ground for sub-prime adjustable rate loans. Also economic weaknesses are leading to the present rise in foreclosure numbers. New Haven is the third largest city of the county. Since October 2007, 50 properties have been auctioned. Foreclosures have also spilled over to the adjacent communities of West Haven, Meriden and Waterbury. In 2007 there had been an increase of 127% in foreclosure postings as compared to 2005. Across the country the rise was 111%. It meant that about 2.12% of all the houses in New Haven are sitting on some stage of foreclosure. Windham, a less densely populated located in the north east corner of the state, records the next highest rate with 1.76% of all the houses being marked by foreclosures Community leaders are trying to rally behind the foreclosure victims. The Mayor John DeStefano Jr. has organized a task force that will tackle the problem in three ways. It will increase advisory services, find out legal options to nab the lenders and set up a fund of at least $10 million to purchase foreclosed properties that will be later used as rentals or sold as affordable houses.Selma M. Levine of Yale Law School observes that since 1996 there has been an increase in the number of vacant houses. Too much has been invested in the real estate in New Haven and it will be a pity to see it slide back.

Lis pendens is the first step in the foreclosure process. It went up by 75% in 2007 in New Haven County from 2005. The other regions were up by 50% except Windham with 82%. The low income localities of New Haven are the worst affected by foreclosures – the areas being Fair Haven, The Hill and Newhallville. These areas had seen the most sub-prime activity. The link is all to obvious. In West Haven the multi family units have been worst hit.

The job market is also dull in New Haven County. In December last year the year-to-year growth was 0.3% as compared to 1% across the entire state. The financial malaise is now infecting all – even those who had taken prime loans.