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Developer’s Mortgage Terms Result to High Foreclosure Rate
By admin | June 18, 2008
In a small Texas neighborhood, homeowners are worried about the unusually high foreclosure rate. It seems like families are constantly moving in but do not stay long and end up facing foreclosure.
Because of this higher-than-average foreclosure rate, state officials, together with a non-profit organization, have decided to investigate the developer, CasAlegria. It was reported that the said developer charged a high interest rate to first time buyers in exchange for some compromise on requirements such as good credit rating and even Social Security Number.
Such incentives naturally attracted home buyers even with the high interest rate. Unfortunately for most who dreamt of buying a happy home, the mortgage terms were simply too much to handle. Their credit rating did not improve even after paying for a couple of years, which made refinancing difficult. In the end, they could not afford to pay the monthly mortgage dues and end up facing foreclosure. In most cases, the repossessed homes end up being sold by CasAlegria once more, after purchasing it from the foreclosure auction block.
The Houston-based real estate developer, on the other hand, defended itself by stating that financial difficulties and mismanagements should not be blamed on them. Also, they are not obligated to report to the credit bureau regarding on-time payments, which would have improved the borrower’s credit score.
In an effort to seek help for their mortgage problems, the local homeowners turned to ACORN, a non-profit organization. The said organization was formed to stop predatory lending practices. In this case, ACORN is hoping that they could push CasAlegria to lower their mortgage interest rates as well as report the payment history of each of their borrower to the credit bureaus.
Nationwide, foreclosure filings soared by almost 50 percent last May compared to last year, as more and more families struggle to keep up with their mortgage payments. It certainly did not help that consumer debt is on the rise as well as fuel and basic commodities prices.
Topics: Foreclosure Rates, Mortgage |