Data just released by a collection of city and state agencies and reported by The Warren Group shows that many of those facing trouble paying their home mortgage loans have had their loans for very short periods of time. Many were unable to pay, from the very beginning.
Number-crunchers from Boston’s Department of Neighborhood Development, the Federal Reserve Bank of Boston and the state Division of Banks have identified some surprising facts about foreclosures ..
… Among the more troubling aspects of the current situation is the number of borrowers experiencing problems with their mortgages soon after receiving them and well before those with adjustable loans are scheduled to see their interest rates reset to higher levels.
More than half the Boston homeowners facing foreclosure this year have had their loans for less than two years, said Department of Neighborhood Development Deputy Director for Home Buyers Assistance Bill Cotter.
While resetting adjustable-rate loans have been cited as a major cause for the current foreclosure problems, Cotter said that many of the borrowers experiencing difficulty have actually had their mortgages for too short a time to see rate resets occur.
A separate analysis by The Warren Group showed almost a third of homebuyers facing foreclosure had owned their homes for less than two years.
This is something I’ve suspected ever since I started reporting foreclosures information from the Suffolk County Registry of Deeds. I’d say around 66% of the loans going into foreclosure were written in 2006. This is unexpected, as many of these are fixed rate, meaning the monthly payments never increased, and many of the rest were 2/28 loans, and monthly payments had not yet increased, at all.
To a certain extent, the new data only supports what many suspected, all along.
The problem of foreclosures is not primarily due to resetting loan rates, regardless of what the media tells you.
It’s a problem of the wrong people given the wrong loans. Or loans at all.
Fingers are being pointed at the lenders much more than at the borrowers.
I think you know how I feel about that!
More: Scope of Foreclosure Crisis Measured – By Amy Wyeth, Banker & Tradesman
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