US Foreclosures Rate Reached New Records

Despite efforts to control the worsening foreclosures situation in the country, the number of foreclosure filings for the first half of 2007 reached an all-time record high. There were a total of 926,000 foreclosure filings, up by 56 percent when compared to last year. In the states of Florida and California, home prices dropped by more or less 25 percent while in Michigan and Ohio, thousands of people in the automotive industry lost their job, further fueling the high foreclosures rate.

Other factors that seem to greatly influence the foreclosure situation include a high unemployment rate and a housing slump, which is evident in the 5.6 percent decrease in existing home sales. To make matters worse, the Moody lowered it rating on the subprime mortgage bonds affecting at least 3.6 percent of CDOs. Many investors did not agree with the decision to cut mortgage bond ratings and believed that it could worsen economic conditions.

The sad state of the US foreclosure shifted the focus on how lending guidelines are being regulated. It seems that the last housing boom created the perfect opportunity for aggressive lenders to take advantage of borrowers with poor credit ratings. Enticing them with mortgage deals that include no down payment schemes, fixed rates for the first two years and interest only payments, many lenders did not take the trouble of explaining to these borrowers the advantages and disadvantages of such offers. Worse, they approved loan amounts that are too much for the borrowers to afford based on their income.

What resulted were almost 1.3 million foreclosure homes. Many owners, upon realizing their unfortunate situation, managed to list their properties with real estate brokers such as ForeclosureConnections.com in order to avoid a nasty foreclosure record on their credit report.