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VA Foreclosures in Alabama Fell but Expected to Surge Again

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By : John Cutts    99 or more times read
VA foreclosures in Alabama slowed in May, but are expected to have a resurgence because of the Gulf Coast oil spill and the financial difficulties faced by a number of military members.

Based on a report from a housing research firm, the pace of foreclosure activity in Alabama slowed in May both from the previous month and from one year earlier, but the BP oil spill that has been affecting tourism, fishing and home selling and buying in coastal areas is expected to push up defaults and eventual foreclosures.

In addition, the expected increase in foreclosed homes for sale in Montgomery, AL could drive an overall increase in statewide foreclosure numbers in the coming months. More VA foreclosures are expected in Montgomery than in other Alabama areas as the city is the location of Maxwell Air Force Base. As military members suffer from financial difficulties because of personal issues like divorce, disability and loss of employment by spouses, more homes purchased with VA loans are getting foreclosed and repossessed. Nationwide, the default rate for VA home loans increased to 8 percent in the first quarter.

Government loans are also popular in Montgomery because the area boasts of several big public employers such as the Alabama State University and state government agencies.

There were almost 2,000 foreclosure actions filed statewide in May, a sharp drop of 20 percent from the total in April and a decrease of two percent from May last year. A big portion of this figure are already counted as foreclosed homes for sale.

Along with the decline in foreclosure activity, the lower number of Alabama foreclosed homes also put the state low on foreclosure rate charts in May, with a ranking of 37th.

However, because of the BP oil spill that has not been resolved two months after the oil well accident, home loan defaults and foreclosures in Alabama are expected to increase in the state, particularly VA foreclosures.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.

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