The foreclosure rate increased this past year significantly as the housing boom ended forcing many marginal borrowers into default. The rate of foreclosure increased 46 percent over 2005 levels with one out of every 92 homes in the country facing some form of foreclosure.
The foreclosure rate is high and going to get higher in the face of resetting Adjustable Rate Mortgages in the coming months. The key to remember is that in 2005 it was hard to enter into foreclosure in many parts of the country. Rising housing prices and hot markets allowed the marginal borrower to sell at a profit if they hit any financial distress.
But with a slow market with rising interest rates, quick sales are hard to do without a major price reduction. Many are riding out the foreclosures because they are unable to find a buyer for their homes to relieve the financial burden at a price they can get out of the property that makes sense.
Thus, a higher foreclosure rate for 2006 and most probably 2007.
More than 1.2 million foreclosure filings were reported nationwide during 2006, which is a rate of one foreclosure filing for every 92 households, according to RealtyTrac, Inc.
The jump in foreclosures last year marks a return to normal levels as the housing market cools from multiyear highs of sales and appreciation, the company said.
Recent homeowners who believed the housing market would continue its break-neck pace or used flexible mortgages to make a purchase may be feeling a sting, the company said. via Reuters.com
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