Foreclosures are a Reality of Life Today

Foreclosure is now a sad reality of life for many homeowners
By Nancy Woodward

Foreclosures in general have been on the rise for over a year. At this time, sub prime borrowers are scrambling to refinance their loans. They payments have now skyrocketed and homeowners realize they must find a way to reduce the loan payment now. Tighter lending standards put into place by Federal Regulators in recent months are making it more difficult to refinance subprime loans.

According to Brett Warren, president of Buyer’s Home Mortgage Inc., as recently as six months ago, most requests to refinance were from homeowners wanting to reduce their interest rates or take equity from their property. Today, most requests are coming from subprime borrowers trying to reduce payments.

Many of these homeowners obtained loans with teaser rates and high fees. Some now find themselves in a position where the equity in their home is negative. As the number of resetting loans increase, so will the foreclosure rate.

Philadelphia and New Jersey have a majority of mortgages in the prime rate area. These seem to have a lower foreclosure rate according to Mortgage Bankers Association. The highest increases in foreclosures last month were in California and Florida, followed by Ohio and Michigan. The firing of employees in the automotive industry had a direct impact on this.

While this number will continue to increase, homeowners should seek help before they reach the foreclosure point. There are ways to solve the problem.