Foreclosures in Texas Overtake National Average

About 6.5% of the entire Texan mortgage holders are defaulting and late in their monthly payments. Foreclosures in Texas have overtaken the national average. The national loan delinquency average reads 5.12% according to Mortgage Bankers Association. In the national rankings of foreclosure Texas ranks 9th as regards late payments. Most of the borrowers in Texas are stumbling because of the increase in interest rates. In Texas during the second quarter 18.7% of the adjustable sub-prime mortgages were in default.

The second quarter report on foreclosures show that the number of borrowers in default are at a record high. The figures do not include those that are already in the foreclosure soup. Foreclosure numbers are worst in California, Florida, Nevada and Arizona from April to June this year.

Doug Duncan chief economist of MBA says that there is a sharp and clear difference in the performances of the fixed and adjustable rate mortgages. This is because of the resetting of interest rates. Duncan added, “Were it not for the increases in foreclosure starts in those four states (California, Florida, Nevada and Arizona) we would have seen a nationwide drop in the rate of foreclosure filings.”

In Ohio, Michigan and Indiana the foreclosure situation has been further mired by the heavy rate of unemployment. Mississippi has the biggest percentage of late mortgage payments – 9.33%. Michigan ranks second having 7.55%.

The experts analyze that the states that had formerly witnessed the zoom of the housing boom – California, Florida, Nevada and Arizona, are now worst affected by rising number of foreclosures. In these states there had been heavy investing but today the speculators finding that the houses are worth less than the loan amount are just walking away from the units. It is not worth maintaining or fighting for. During the five years of the housing boom the prices of real estate had surged creating a speculative balloon. Houses were quickly bought and sold for heavy gain. Now that the bubble has burst the number of unsold houses are rising. Speculators are finding it is more profitable to default on mortgages! Another two million sub-prime loans with adjustable rates of interest are ready to rise to higher niches. This will cause the monthly amount to be paid towards mortgage dues to double or maybe even triple. The problem is acute with sub-prime mortgages where loans had been given without checking to see if the borrower would be able to continue or not.

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