According to the Federal Reserve, more banks have decided to tighten their lending standards particularly on home loans including traditional prime housing loans, non-traditional mortgages (subprime and “interest only” mortgages). This decision is not remotely surprising as most of the banks have been losing much money over defaulting mortgages. Their large inventory of foreclosure homes are poised to get even bigger as sales activity remains sluggish.
ForeclosureListingsNationWide reported a 30 percent increase in national foreclosures rate and states with the most number of foreclosure filings include Nevada, California, Florida, Michigan, Ohio, Colorado, Arizona, Georgia, Indiana and Texas. The worsening foreclosure situation has already cost Citigroup about $6.5 billion in credit and they are expecting about $8 to $11 billion more.
Many fingers are pointing to the subprime mortgage industry. Loans with adjustable interest rates have accounted to the majority of the mortgages in default. Many borrowers have been led to believe that offers of “interest only” and “no down payment” schemes will actually benefit them. Unfortunately, resetting interest rates resulted to an average of 40 percent increase in their monthly mortgage payments – an amount they could not afford.
Real estate buyers and investors, on the other hand, are waiting in the sidelines and carefully studying the volatile market. These buyers are actually waiting for home prices to fall down much further before making a move. A considerable drop in home values has already been observed nationwide especially in states and cities hit hardest by the foreclosure crisis.
Most buyers rely on foreclosure listings from brokers such as ForeclosureListingsNationWide in order to enjoy the hottest leads on these foreclosure properties. With millions of foreclosed homes for sale, these listings will certainly be handy.
Legislators are looking into mortgage reforms in order to prevent another market meltdown. It is widely believed that relaxed mortgage lending guidelines played a significant role in the present crisis.
Related Posts:
- New Jersey Market: No Longer on the Rebound
- Nearly 650 houses in Utah Under Foreclosure
- No Escaping the Subprime Disaster
- A Year for Foreclosures: The 2008 Mortgage Rates Review
- Prioritize Homeowners to Stop Foreclosures
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