GA's foreclosure rate is double the national average (Atlanta, Dallas: real estate, foreclosures)

[Go Blue 99]

Linked:
U.S. Foreclosures Rise Sharply in July: Financial News - Yahoo! Finance (broken link)

Does anyone know why the rate is so high for GA? I know Nevada is high because of the crazy price run-up in Vegas, and MI is high because of the miserable local economy there. But GA has neither of these problems.

[dlh891]

I think that a large part of the reason is the nonjudicial foreclosure. You can be foreclosed on so fast in Georgia it may not even give people time to refinance or sell first. I knew quite a few people in Florida that rode out the foreclosure process for nine months to a year because it has to be done through the courts.

[ATLienGirl]

Another reason foreclosures may be high are these ARM mortgages. The common sense thing to do would be to refinance, but, some people I know jack up their credit because they think they have secured a house, then, their payments go up drastically because they forgot or did not refinance and they are in trouble.

ARMs can be good if you know how they work; and some people see the low payments and it hasn't clicked in their head that eventually, "my payment will go up so I may be paying more for this house then I am able to."

Some people may have rental properties foreclose; for example, in my colleague's situation, one of their tenants bailed out on them and left them with two mortgages. They did what they could to keep the rental, but ended up losing it.

It's a sad situation. Many of these loans that lenders approved just to get paid are blowing up in their faces.

[gt6974a]

yeah it's bad, but it's also buyer beware.

dlh891 is correct that it's easy and quick to foreclose in Georgia, but buyers should know this well ahead of time. They should also know how their loans change.

I read an article yesterday in USA Today money-real estate about a family in California, bought a $538K home on $90K/year household income with $700/month car payments. They got a 2/28 loan and are now the 'victims' of their brokers. I find that ridiculous.

They basically relied on the equity and ability to refinance before the 3rd year, they didn't get their equity b/c prices dropped and didn't read their loan where it said they couldn't refinance before the 4th year w/o penalty.

People are buying more house than they can afford. They are 'house poor' and when the Arm hits or something comes up they're screwed.

Yes, a home is an investment, but like any other investment you can lose your ass. I know my father is pissed b/c his portfolio just lost 15% b/c of where some of his money was, i.e. housing market but no one who plays the stock market is considered a 'victim'.

I feel bad for these people but Hell, I think when my parents bought their first homes, interest rates were around 14-18% and they didn't lose their ass.

[Parsec]

Originally Posted by gt6974a

People are buying more house than they can afford. They are 'house poor' and when the Arm hits or something comes up they're screwed.

Yes, a home is an investment, but like any other investment you can lose your ass. I know my father is pissed b/c his portfolio just lost 15% b/c of where some of his money was, i.e. housing market but no one who plays the stock market is considered a 'victim'.

I feel bad for these people but Hell, I think when my parents bought their first homes, interest rates were around 14-18% and they didn't lose their ass.

I definitely agree w/this - people in Atlanta definitely like buying more house than they can afford. I'm not talking about the whitecollar households -- I'm talking about the median household earning like $50k/year buying luxury cars and new $275k homes. Atlanta is similar to Dallas in that there are a lot of $50,000/year millionaires. Your money goes so much farther here than in other parts of the nation, so people who are making around $50k think they are rich and get carried away buying things they can't afford.

gt6974a: you went to tech, didn't you? I came in the year after they stopped the gtxxxx numbers, so you must've graduated YEARS ago, heh. Interesting to see you're still using your gt # ... Go Jackets!

[JPD]

Originally Posted by ATLienGirl

Another reason foreclosures may be high are these ARM mortgages.

This is probably the main reason why foreclosures happen so frequently, in general, but ARMs are available throughout the US. They don't explain why GA's foreclosure rate is twice the national average.

[gt6974a]

Originally Posted by Parsec

gt6974a: you went to tech, didn't you? I came in the year after they stopped the gtxxxx numbers, so you must've graduated YEARS ago, heh. Interesting to see you're still using your gt # ... Go Jackets!

yep, I still have a buddy and his gt number is still valid...... he's finishing up his 10th year at Tech though. Although in that time he's received his BS in EE, MS EE, MBA, and working on his PHD.

As far as the ARM's, they're not the only reason but in combination with the easy foreclosure process it acts as a double whammy. Clark Howard talks about this subject quite a bit.

[TimtheGuy]

Originally Posted by Go Blue 99

Linked:
U.S. Foreclosures Rise Sharply in July: Financial News - Yahoo! Finance (broken link)

Does anyone know why the rate is so high for GA? I know Nevada is high because of the crazy price run-up in Vegas, and MI is high because of the miserable local economy there. But GA has neither of these problems.

There are a lot of bad borrowers in the South.

[TimtheGuy]

Originally Posted by Parsec

I definitely agree w/this - people in Atlanta definitely like buying more house than they can afford. I'm not talking about the whitecollar households -- I'm talking about the median household earning like $50k/year buying luxury cars and new $275k homes. Atlanta is similar to Dallas in that there are a lot of $50,000/year millionaires. Your money goes so much farther here than in other parts of the nation, so people who are making around $50k think they are rich and get carried away buying things they can't afford.

gt6974a: you went to tech, didn't you? I came in the year after they stopped the gtxxxx numbers, so you must've graduated YEARS ago, heh. Interesting to see you're still using your gt # ... Go Jackets!

and the Escalade with the 22" spinners....

[JPD]

Originally Posted by TimtheGuy

and the Escalade with the 22" spinners....

They don't buy the spinners, they rent them...which is far worse for your finances.