Record Highs Set For Atlanta Foreclosures

October 22nd, 2007

In Atlanta, foreclosures have just hit a new high, causing experts to comment once again that the sub-prime mortgage lending issue is still far from over.

Statistics in October which were released this Monday by Equity Depot, based in Alpharetta, stated that around 6,809 homes in around thirteen counties are in the process of being auctioned due to foreclosure. This is a massive thirty-eight percent rise over September, and an even bigger increase of 49% over the same month last year.

The total figure in net value of properties in the process of foreclosure in Atlanta has crossed one billion dollars! Barry Bramlett, an Equity Depot vice president said that “This is the largest swing we have ever seen from month to month”.

These statistics include those foreclosure properties filed in November as well as those which have already been served with legal notices to make it in time to go to foreclosure next month.

Bramlett commented that high interest rate mortgages or sub-prime loans are causing this growth in foreclosures in metropolitan Atlanta. These adjustable rate mortgages make up around 50% of foreclosure notices in 2007. “It truly looks like a sub-prime mortgage problem” Bramlett said. “We’re not seeing that many prime mortgages.”

For every four homes in metro Atlanta, one homeowner has depended on “sub-prime” mortgages. This has been an emerging trend over the last few years. These loans have a higher interest rate than normal loans, and are offered to those who don’t have good credit or have poor credit, or insufficient money to put down for a down payment.

It has been seen that sub-prime loans are likely to fail more than 10 times as compared to prime loans. Largely driven by interest rate resets in these adjustable-rate mortgages, experts anticipate that this will cause a further hike in foreclosures in the next three months, as homeowners will find it difficult to meet their monthly installments.

A Georgia Tech professor, Dan Immergluck, who is an expert on foreclosures, said
“Now that we are at this kind of quantum level up in terms of foreclosure activity, I think we’re going to start really seeing the effects on housing prices”.

Prices of real estate California and Florida already have declined, affected by this rise in the number of foreclosures. It is likely that a decline in prices will also take place in Atlanta, where foreclosures are already making more homes available in the market at a point in time when there is a slack in demand, Immergluck said. He also said that he feels that government action is required, especially to aid new buyers in getting a loan.