Frederick Foreclosure Crisis Continues - II

May 27th, 2008

The sub-prime loan rates that have prevailed with most of the homes loaned in Frederick County are all essentially adjustable rate loans. One of the ways this loan has garnered customers is to help buyers who are able to make lower credit payments or have poor credit payment histories, to get them to obtain their finances, enabling them to buy their homes. As reported by Edward Prescott of the Federal Reserve Bank of Richmond, research economics department, the subprime products seem to have edging, though slight differences. However, all of these transactions seem to be having similar elements with some credit rates impaired. Low credit scores, high income-to-debt ratio, and a dearth of credit history as well as low documentation are such examples.

This risk laden lending process born during a time of booming real estate prices has in fact led to a big time crash in prices when these loans kept ending in foreclosure with people already in a tight fix for money. Ultimately, people found themselves unable to afford these mortgage rates of monthly payments as interest rates continued to spiral north.

The entire Frederick County may not have quite hit bottom so far. An appraiser with Six and Associates, Wayne Six, has commented that there is in fact much more to come in terms of foreclosure rise in the County. In an atypical way, the Frederick County had a balanced foreclosure market when almost 1,100 to about 1,200 homes went for sale, all at one shot. By April 21st, about 2,023 homes were being reported to be available for sale. From mid-Jan this year, the inventory had grown when the homes meant for sale hit 1,850. However, the number of people who were expected to reach up to make the purchases were dwindling rapidly too!

Though more people are buying, for instance, 40-45 sales occurring per week, compared to instances 20 to 30 years ago, about 60 or so homes are still being put up on the sales front each week. Six has said that it is quite like the situation with the fish on the hook which is biting the line only a little bit, but not really making it possible to reel the fish in, as would have been expected! This analogy in fact sums up the cagey and cautious steps taken by buyers in their natural preservations in the foreclosure situation all across the County.

Home prices experiencing the hardest hits compared to previous years, have in fact risen out of the ashes, according to the market research led by Andy Bauer, who is a regional economist and analyst for Federal Reserve Bank of Richmond.