According to the chief economist of Economy.com the foreclosure rates are rising, 2006 had approximately 900,000 and 2007 is projected to have 1.3 million.
The reasons for the increase are 2 fold:
1) Adjustable rate (ARM mortgages) are adjusting
2) Changes in the sub prime loan market (tighter criteria)has resulted in ARM holders being unable to refinance for a better rate
Some of you have noticed properties on the StormLakeMLS.com web site that have the owner noted as corporate - the majority of those are foreclosures. Real estate markets are all local so things that impact other markets may not be seen in ours, however we are feeling the influence of the sub prime market changes.
Personally I am not a fan of most of the sub prime loan products. In my opinion the majority of sub prime loans, signature loans and unverified income loans are predatory lending. In other words, the only one benefiting from them is the lender.
End result more people unable to make their mortgage payments, more foreclosures, more stress for everyone, more spouse and child abuse, more crime, more suicide and higher taxes WHY??? so we (tax payers)can cover bad financial institutions GREED.
I don't have THE answer to this massive problem, I wish I did, I would travel town to city and shout it from the roof tops to save families so much anguish. All I can offer is good advice to my Realtor colleagues. Maybe I should structure it as a plea, please, please help your Buyers with their financing. Many Buyers don't understand that the rate and terms a financial institution gives them are both subject to negotiation.
Take their good faith estimate (received AFTER you have given the financial entity a copy of the accepted offer)and help them shop it around to make sure they get the best deal. I personally think getting my clients the best deal all the way around is what I am obligated to do - don't you?