From July to August foreclosure mortgage rate in North Carolina increased to 83% according to reliable online tracking sources. For every 1,131 houses there is one foreclosure and 69% rise in the state’s year-over-year rate.
North Carolina ranks 22nd in the foreclosure drama. Across the country foreclosures rates increased to 36% from July to August and it was 115% year to year.
Figures released by the state show that about 50,000 ARM’s started off from North Carolina in the previous year. Most the loans were in the sub-prime category. The Center for Responsible Lending in Durham is of the opinion that 17.5% of the sub-prime mortgages made in this region during 2005 to 2006 will ultimately face the ignominy of foreclosures.
In three states – Nevada, California and Florida (ranking first, second and third respectively) – there has been an unusually rapid fall in real estate foreclosure prices. This corresponds with the swift rise in foreclosure listings.
The sub-prime mortgage plans were launched aggressively few years ago with the laudable intention of making available loans to a particular section of the community who did not have the proper credentials to qualify for a prime loan. The idea was to increase the numbers of house owners in America. The initial rates were teasers with little or no down payments and interest-only tempters.
But the adjustable rates soon began to reset for the worse. The borrowers could not meet the new demands – which had sometimes more than doubled. More borrowers began to fall behind in payment and were issued foreclosure notices. The number of foreclosure listings rose to such alarming proportions that Wall Street began to sit up and ripples were felt all over globe.
The situation spread beyond the narrow limits of the borrower-lender zone. It began to shake the socio-economic climate of the entire nation. With monthly dues not trickling in mortgage companies found a credit crunch. Many downed their shutters. Others tightened their lending practices but this had a negative impact on the market.
With no buyers there were no takers for the innumerable units of foreclosed homes going into auction. Real estate prices began to fall. It kept on falling. Lenders lost their last chance of paying off dues by selling off the property. But under the present circumstances the property had little equity left. The government is now being forced to sit up.