Lisa Simpson
Jan 17,2008
In: Foreclosure Homes

Foreclosure Homes

The number of foreclosure homes continues to rise in USA despite many measures being taken at local, state and federal levels. The concentration of foreclosure homes however varies from one locality to another. Foreclosure homes are nothing new in the mortgage market. What is new is the number – the alarming number of foreclosure homes.

Foreclosure homes result from a legal process. A borrower loans money to buy a house keeping the property as security. The principal and interest is paid off in monthly instalments. But if the borrower fails on three consecutive occasions to meet the monthly dues the loan is said to have become delinquent because the borrower has defaulted. If the borrower fails to become current then the lender forecloses. This leads to foreclosure homes. During this time the borrower still has a chance to clear dues. But if that fails then these foreclosure homes are sold off at the auction. From the proceeds of the sale of foreclosure homes the lender realizes dues, clears tax dues and if anything is left over it goes to the borrower.

Why is it that foreclosure homes have of late grabbed the headlines? This is because of the increase – phenomenal increase in numbers that is linked to the sub-prime market. Wherever there has been hectic sub-prime activity in the recent past there are innumerable foreclosure homes today. It was difficult for many to avail of loans in the prime or conventional mortgage market because of low income and bad credit score. In the sub-prime market there were no constraints – all that was required was the beating of a pulse! Even down payment was waived. During the first two years repayment consisted only of the interest and as such the amount was low. But within two years the ARM’s or adjustable rate mortgage began to rise – to double or even triple figures. The borrowers with their limited income found it impossible to keep abreast and consequently foreclosure homes began to abound.

Today there are so many foreclosure homes that the nation is in a tizzy and groping in the dark to find a solution. Foreclosure homes are affecting not just the borrowers but the lenders too. Here the battle lines are not drawn – the foul smell is spreading like a virus sucking in the socio-economic health of the entire nation. Foreclosure homes are a curse rocking the sanity of the country.