Rich Kansas City Addresses Get Foreclosure Notice

March 24th, 2008 | Tags: Foreclosure

Although most of the foreclosures are happening in modest and low income neighbourhoods slowly the wave is beginning to lap the shores of rich havens with indoor pools and private golf courses. It amounts to 5% of all the houses included in a high range bracket. A review showed that in Jackson, Johnson, Platte and Clay Counties there are 50 houses valued at %500,000 facing foreclosures. The number could be higher because some of the affected are selling off their houses without letting the banks know that they are in a fix. Now high-end foreclosures have become quite common. As houses slide into foreclosure neighbouring real estate market takes further battering.

Houses in cities that were once rated to be nearly or more than $1 million are being sold for $200,000 and $400,000 – even then buyers are lacking. It means bank losses running into millions and massive losses for the tax and revenue departments. Home associations are now facing a crunch and finding it impossible to see to the maintenance of neighbourhoods.

The upper class is suffering for the same reason – they bought houses they could not afford by opting for risky mortgages. All that they banked on were pay cheques and promises. They also kept on borrowing leaving no equity for a rainy day. The loans largely belonged to the Al-A category of loans. These carried more risk than Alt-A Prime loans. The only security required was an affidavit declaring the income of the borrower. Today the loans have become higher than the worth of the house. Together with this are the usual woes of unemployment, divorce and illness.

Most of the houses are in the newer subdivisions. Banks are being blamed for these lax lending standards. Nobody envisaged that prices that go up can also crash down. It was nothing but sheer speculation, opine noted economists. They thought that with house values going up they will go on refinancing and soon become rich after clearing dues. For instance a house on 64th Terrace in Kansas City was bought for $450,000 in 2003. Later it came to be listed for sale with a price tag of $890,000. For three years it sat on the shop shelf and then suddenly it was bought off for $1.23 million. Records tell that the owner had kept on taking loans totaling to more than $1 million – that is 90% of the value of the property.