Foreclosures on home mortgages are on the way up.When it's not in the Business section or the Real Estate section but the frontpage of Sunday's paper you know it's story.Within the next 18 months many mortgages are going to be refinanced,which means more sellers with those higher interest rates.
In Illinois during the first three months of 2006 nearly 13,700 properties entered foreclosure, up 32 percent from the fourth quarter of 2005, according to an analysis by property tracker RealtyTrac Inc.
The numbers are grimmer elsewhere in the Midwest. Michigan and Ohio, battered by automotive-related job losses, together recorded 45,000 mortgages entering some stage of foreclosure in the first quarter. Those are increases of 91 percent and 39 percent, respectively, compared with last year's fourth quarter.
Nationally, foreclosures are up 38 percent, higher than in any quarter of last year, RealtyTrac said.
There are many reasons for the growing number of defaults, and there are suggestions that the foreclosure trend may soon worsen.
Layoffs due to corporate downsizings, health-care issues, increasing debt levels and rising interest rates all are factors. In addition, a growing number of homeowners are relying on adjustable-rate mortgages, catching some people by surprise when their monthly payment rises.
Significantly, some of those ARMs were offered with an initial three-year to five-year period in which the rate was fixed. At the end of that period the mortgages will be reset at prevailing rates, potentially upending borrowers as interest rates have been rising. For many such people that moment is approaching.
"The increases we've been seeing in foreclosures don't even reflect the worst-case scenario that could happen when the $2.7 trillion in adjustable-rate mortgages are reset over the next 18 months," said Rick Sharga, vice president of marketing at RealtyTrac.
Sunday, May 28, 2006
Mortgage defaults on rise
The Chicago Tribune reports this story on the frontpage of Sunday's paper: