Americans are now paying the prices for the years of unhindered mortgage lending that lead to the U.S. Housing Boom. A wave of foreclosures has swept across the country triggered by families failing to pay their monthly mortgage amortizations, which they could not afford.
Foreclosures have swept families away from their homes, particularly poor and low-income families who were victims of predatory lending tactics during the housing boom. Now, the crisis is stepping up and has affected even the wealthy, like the increase of Illinois foreclosures in affluent neighborhoods in Chicago.
Wealthy doctors, lawyers, executives and other upper middle-class individuals bought their homes in these rich communities paved with red bricks and lined with plush stores and excellent schools. These residents never thought that they would also be affected by foreclosures. Most of these homes have jumbo prime mortgages or those amounting to $417,000 and above.
Now, 5 percent of homeowners with these mortgages are delinquent in their payments for 60 days or more. This is three times higher than the rate in 2007. Although the numbers are not as high as the 29.5 percent rate for subprime loans, jumbo prime mortgages is registering the biggest increase of delinquencies in any category.
The market has been flooded with foreclosed properties, creating an excess in inventory and creating a severe price depreciation that people owe more in their mortgages than what their houses are worth. The U.S. economy is not getting any better resulting to more unemployment, which is expected to reach 10 million by December.
Experts are saying that it will take a long time for the market to recover and it would get a lot worse in 2009. With this scenario, real estate agents are having a hard time selling expensive foreclosed homes from jumbo mortgages as buyers are finding it difficult to get mortgage loans at this level.
Leticia Carvalho has been educated in the finer points of the foreclosure market over 5 years.
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