19 Nov
Posted by Richard Dougherty as Foreclosures
With foreclosures marching on gobbling up properties Democrats in the Congress are asking for more aid to help victims. Amalia Bareda of News Center5 says that the Democrats want the President to bring about coordination in the matter of the sub prime crisis through a special advisor.
The scenario according to Gemma who keeps track of foreclosure figures online is not just a crisis but also a frightening one. Some of the best cities in Massachusetts like Lynn, Lawrence and Brockton are also reeling under the foreclosure scourge. About two thirds of the state has witnessed a 50% increase. In the past one year more than 25,000 units were foreclosed which meant a 76% rise over the same time in the previous year.
July has witnessed a tally of 2,500 foreclosures leading to a break in records. The third quarter is marching on ready to challenge the numbers of the previous quarter. Till recently the affected were borrowers in the low-income bracket. But now the middle group who took sub prime loans is no longer spared. Gemma’s expert opinion is that this state of affairs will continue unabated throughout this year and in all probability all through 2008 also. Chances of lessening of foreclosure activity are not there at all.
The sub-prime category of mortgage loans was launched with much fan fare to allow those who could not avail of prime loans to get an opportunity to chip into the mortgage takings and have a house of their own. After all this is the great American dream. But due to predatory lending and reckless borrowing the sub-prime market spun out of control. The sub-prime loan drew in borrowers with teaser terms with practically little of no down payment. The initial monthly payments consisted of only the interest. But after a couple of months the amount increased to more than double. It became impossible for borrowers to keep the show running. With property value going for a tumble refinancing also became difficult. The matter became more complicated with the borrower having to face usual problems like sudden illness, unemployment or divorce. Today the number of foreclosures has reached such jumbo figures that the problem has become a national socio-economic one. With minorities and the elderly becoming easy targets politicians have started to sit up. Wall Street is worried. Ripples are being felt right across the globe.
