Flurry of Foreclosure Activity Spreads Across the Nation

Buyers, beware! As you set out for a Florida home loan, make sure it’s one you can afford and avoid being the next in a growing line of home owners to default on their mortgage.

According to a recent report, foreclosures jumped 27 percent in a single month - and 45 percent in the past year. These numbers represent the trend of a couple growing concerns: rising rates and softening home prices that are lowering the boom on home owners, as indicated by RealtyTrac.

“This is the first time since we introduced the report in January of 2005 that we’ve seen back-to-back months with increases of more than 20 percent,” said James J. Saccacio, chief executive officer of RealtyTrac.

And you can’t merely blame this on the seasons.

“While some of this might have to do with the seasonality of normal real estate cycles, it appears that rising interest rates and softening home prices are beginning to push foreclosure inventories close to the historic average of one percent of all us households,” Saccacio added.

Georgia had the highest foreclosure rate of any state - one new foreclosure for every 422 households. The foreclosure rate jumped 144 percent in a single month as the state reported 7,342 properties entering some stage of foreclosure, more than twice the number reported in December.

Moreover, foreclosures are not an equal opportunity financial problem.

Foreclosures among minority home owners are often higher, perhaps due to the growth in the subprime market which offer loans at higher interest rates than prime loans which are designed for the most creditworthy consumers.

Unfortunately, numerous studies have shown that minority borrowers are often targeted with subprime home loans, even when they could easily qualify for prime Florida home loans.

According to a recent New York Times report, Cleveland State University research found that in Cuyahoga County, Ohio, the ratio of auctions to regular sales was 23 per 100 last year in the eastern portion of the county, which is 52 percent black and 7 percent Hispanic. That was up from nine foreclosures per 100 regular sales in that area in 1995. In the 82 percent white western portion of the county, the ratio was 11 foreclosures per 100 homes sold, up from 2.5.

The Times also reported that the number of Chicago foreclosures has tripled since 1993. Neighborhoods where the population is more than 80 percent non-white account for 65 percent of all cases, up from 61 percent in 1993.

The increases in foreclosure rates could be the first wave of financial disruption in other communities including Philadelphia and Atlanta where minority neighborhoods are loaded with subprime adjustable rate mortgages (ARMs) expected to jump to higher interest rates in the coming years, according to analysis of data lenders must disclose under the federal Home Mortgage Disclosure Act.

Other higher foreclosure rates are expected in generally high cost regions with or without minority communities. RealtyTrac also found that along with Texas and Georgia, five states reporting the most new disclosures in January included Florida, California and Ohio.