Monday, July 9, 2007

Mortgages - foreclosures, fraud but now Atlanta, GA

Today's New York Times published Increasing Rate of Foreclosures Upsets Atlanta. Other than wondering who will not be upset by increasing foreclosures, the article does show that the subprime lending issues continues to be a problem. The I noted The Herald-Bulletin articles on this subject in an earlier post which is here.

Rajeev Dhawan, an economics professor at Georgia State University, has started studying the characteristics of loans on homes that are in foreclosure. His preliminary analysis of data from April shows that nearly half were for adjustable rate mortgages and many were issued in the last two years.

“Everybody thought if the home prices kept going up, the lenders will keep refinancing you,” he said.

In recent years, industry groups and law enforcement agencies have also cited Atlanta for being home to some aggressive mortgage fraud schemes. It may have been an easier target because the prices of homes in the same neighborhood can vary greatly here, making it easier to inflate appraisals.

To me, this description sounds like Indiana:

“We are a very affordable place,” said Mike Alexander, the chief of research at the Atlanta Regional Commission, an organization that serves local governments. “But our incomes are very low, and if anything went wrong, it would be very hard for people to maintain their homes.”