Foreclosures Swallow Palatial Properties

It looked like a palace with a stone façade, granite countertops and half a dozen bedrooms. Once the price of this dream property in Collierville was $609,900 but today it is ready to change hands for $569.900. It is symptomatic of the current foreclosure crisis.

Foreclosed houses are running into millions. It is no longer contained in poor regions and the bane of poor buyers living in the suburbs. Now high society is also infected with the malaise. Foreclosures are breaking down understanding boundaries. The middle and high-income group are being also sucked into the vortex.

Foreclosures have taken over Shelby County. A seasoned real estate agent says that the number of foreclosed properties being handled has increased by 40% since the previous year. Most of the affected are those who suddenly faced financial troubles or spent more than they earned. Many middle class people understood the financial implications but could not change their spending habits. Foreclosures became inevitable.

Previously the worst affected foreclosure pockets were in North and South Memphis, Frayser etc. Many in the newer subdivisions of Cordova have already tasted foreclosures having been lured by predatory tactics of lenders. More lease-to-own signboards are popping up in older localities as well as Cordova subdivisions. This points to a weak real estate market.

A study has been conducted by the Center for Community Building and Neighbourhood Action. The localities with zip codes 38016 and 38018 (this incorporates Cordova as well some areas of Shelby County) filed 651 foreclosures in 2006. This year till September there were 633 foreclosures and it is apprehended the number will rise to 844 before the year closes.

The general opinion puts the blame on the lax lending practices of the sub-prime mortgages. Some people were aware of what was coming but could do nothing. Many were buying houses they could not afford by any stretch of imagination. The lenders greatly benefited from pushing through these loans by way of commissions and other advantages. Lenders made bundles of money by packaging these loans to investors who had never seen these units. The matter no longer remained confined within the borrower and the local banker. Considering the gain, these loans were practically forced upon the gullible. Previously the banks were very particular about not lending out more than a certain percentage of the income. But those rules were waived.

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