It Is Now Connecticut Facing Foreclosure Eruption Never Before In History!

November 13th, 2007 | Tags: Foreclosure

The national crisis of home foreclosures has shown its ugly head in Connecticut as well, as enormously as an epidemic. The Boston-based Warren Group reports home sales have fallen steeply and the number of foreclosures have increased manifold – 2,948 in Hartford County alone. Statewide, it turns out that 12,575 homes have been foreclosed and the hardest hit is New Haven County with 3,914 Nos.

Statistics show that Hartford tops the region with 500 foreclosures, ranking 3^rd in the State; Waterbury -597 and New Haven -658 are the other two. New Britain with a combined total of past 300; East Hartford -264 with other towns Bloomfield, Enfield, Manchester, Middletown, Southington and Windsor following with more than 100.

Hartford County was long expecting this explosion and in April Governor M. Jodi Rell had convened a Sub-prime Mortgage Task Force to analyze the dramatic increase in sub-prime loans.

Attaching top priority to the issue, the Mortgage Foreclosure Assistance Hotline was created in August for providing suitable housing advocacy by an attorney to the home owners in distress. It is estimated out of the 71,000 sub-prime mortgage loans in Connecticut worth nearly $15 billion, 8 per cent are presumed to be delinquent.

Following the terrorists attack of Sept.11, the financial markets reflected a changed scenario of Federal Reserve and Wall Street coming to offer loans cheap to mortgage brokers by pooling up mortgages. This was the starting point of the slide in real estate market.

Real estate circles assess the situation and attribute the large number of foreclosures emanating to first sub-prime lending, gearing up the business and secondly the predatory lending practices, without bothering about the repayment capacity of the borrowers. People did not realize that the interest rates which were 6 to 7 per cent initially would adjust to 9 to 11 per cent thereafter. Another factor contributing to the woes of the borrowers is people got loans for even the closing costs, that is 103 per cent loan sanctioned to them. When the mortgage loan repayment installments go up from mere $1200 per month to as high as $2000, these borrowers blink and give up the houses to be foreclosed. This is not an isolated occurrence in big cities but also in towns like Farmington, New Britain and Berlin. The urban centers where a large number of mortgage loans were granted have been hit very hard with enormous number of foreclosures.

To tackle the problem of foreclosures, the task force set up by the Governor is insisting upon bringing legislative changes in educating the future mortgage loan originators and supervisors with sufficient training for pre-licensing up to 40 hours and continuous education for 18 hours, two years once for license renewals.

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