Foreclosures in Indiana Continue At a High Pace

September 22nd, 2008 | Tags: Foreclosures

Indiana continues to be one of the worst foreclosure hit pockets in the country according to RealtyTrac. In July it was included among the top ten offending states with a foreclosure rate of 1:609. The rate in USA in July was 1:693.

Although there have been a large number of foreclosed houses in Terre Haute, the real estate here has been less affected than elsewhere according to local scrutinay. Justin Woodruff of Scyamore Lending Group analysis that this is because during the housing bubble and zooming, the prices of houses did not bloat and swell; consequently there was no bubble that could burst.

Charles Bryan of Crossroads Realty Group dealing in real estate brokerage comments that in Indiana the market has remain a buyer’s one for few years despite the turmoil elsewhere. Especially Terre Haute has remained an oasis undisturbed. Realtors are busy with the sale of 1,302 houses in Vigo, Clay, Sullivan, Parke and Vermillion Counties. However compared to previous years the market is on a slightly lower key.

The Brazil area however is showing signs of slowing down with ‘For Sale’ signs dotting the corners. Virgil Butts of Butts Auction Realty says that the houses that could have been refurbished and sold in the market quickly are now waiting for more than six months.

In Indiana as elsewhere the accusing finger for this foreclosure crisis points to the sub-prime mortgages with low teaser rates. These were sold to people with modest income and who did not have the capability to manage the mortgage when the interest began to spike. Some walked into houses without making even a down payment. In the first quarter of 2007 the sub-prime mortgages accounted for 50% of the foreclosures.

Today the sub-prime business has collapsed. Nobody wants to touch them anymore. But the damage has been already done. In Terre Haute the companies that used to specialize in sub-prime lending have downed shutters. At least six of these firms have disconnected their telephone numbers. It raises a big question as to why lending standards were allowed to fall to these levels without any regulations. Till five years ago potential buyers of property had to put down 10% to 20% as down payment. But recently that figure had come down to 0%! Some were sanctioned mortgages to those who had to pay half their income to meet the monthly dues. How could they pull along with other expenses for sheer survival? They could not and foreclosures became inevitable.