Record Foreclosure Rise

In Dallas-Fort Worth region foreclosure listings rose by 10% since last year, creating a record. During the last five years there has been 50% rise in foreclosure listings. Predatory lending is largely held responsible for this crisis. The number of houses ready to be sold in December is up by 14% from what it was in last year. In Dallas County there were 20,086 foreclosure listings this year – slightly less than 24,000 recorded in 1989. If the numbers of the surrounding counties are taken into account then the gap will be crossed in all likelihood.

In Collin County foreclosures listings rose by a third and by 23% in Denton County. In 1989 collection of figures was not totally accurate. There has been an unprecedented growth of population in Tarrant, Collin and Denton Counties.

In the late eighties there had been a local recession that had forced many house owners to lose their properties. This time the local economy continues to hold its position. Thus the accusing finger for these large numbers of foreclosures points to some buyers who took sub-prime loans to buy property. These mortgages are risky deals with interest rates rising abnormally after two years or so. The borrower just cannot manage the loan and foreclosure becomes inevitable. Nearly 2 million house owners are about to lose their properties to foreclosure within the next few years.

Less than 10% of all house owners have taken sub-prime loans but foreclosures result from 50% of sub-prime loans. The ratio keeps rising is the opinion of Lawrence Yun a top economist. While on the one hand some borrowers cannot pay higher mortgage dues many investors have stopped paying because with falling real estate prices it is not profitable to continue. So they are just walking away.

The highest numbers of foreclosures are from North Texas but defaults are greater in number in California, Michigan and Florida. Foreclosures are not evenly spread out with some areas less affected than others. Experts opine that this foreclosure fiasco will result in property prices dropping in USA $223 billion.

Loans hatched in 2003-2006 are now coming back to roost. There is no running away from this fact and by accepting it one has to find methods to parry it. The law and the administration has so far looked the other way and allowed the situation to run out of control.

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