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[Rob <becida AT comcast.net>]

I read the article below and wondered about the 
1.2 mil homes in foreclosure, is that a high 
number? Down below is an article on the 2005 foreclosures.

Rob
becida AT comcast.net




SEATTLE POST-INTELLIGENCER
http://seattlepi.nwsource.com/opinion/304015_trahant18.html

Time to get some closure on foreclosure

Sunday, February 18, 2007

By MARK TRAHANT
P-I EDITORIAL PAGE EDITOR

These are the best times ever. A new report by 
the Mortgage Bankers Association brags that we 
Americans are demonstrating "the greatest and 
widest availability of mortgage finance in our 
nation's history, which in turn has made possible record homeownership rates."

The bankers call it the credit democracy. The 
wonderful era when nearly everybody could borrow 
freely with few documents, lighter restrictions and self-proclaimed income.

"In light of the mortgage lending industry's 
achievements in democratizing credit, the debate 
no longer concerns whether credit is sufficiently 
available to borrowers," the bankers say. 
"Rather, the debate now has turned to whether the 
loans particular borrowers receive are in their 
best financial interest. Because of claims of 
lending abuses and foreclosures, some consumer 
advocacy organizations have recently suggested a 
'suitability standard' should be imposed on the mortgage lending industry."

I rather like the phrase "because of claims of 
lending abuses and foreclosures." It only takes a 
few words to dismiss the growing data that 
suggest we're headed for a credit meltdown. If 
you can find the news beyond strange celebrity 
behavior, consider that several banks (probably 
members of the Mortgage Bankers Association) last 
week reported a sharp increase in defaults on risky mortgages.

Last week, for example, ResMae Mortgage Corp. 
filed for bankruptcy protection. According to 
Bloomberg, it's "at least the 20th mortgage 
company to be sold or closed as delinquencies 
rise and the market for home loans to risky 
borrowers contracts at the fastest pace ever."

"The sub prime mortgage market today is a quiet 
but devastating disaster," said Martin Eakes from 
the Center for Responsible Lending and Center for 
Community Self-Help. "The ultimate effects are 
very much like Hurricane Katrina, as millions of 
citizens lose their homes and the fabric of entire communities is threatened."

Eakes testified before the U.S. Senate's 
Committee on Banking, Housing and Urban Affairs 
earlier this month about predatory lending practices.

"Our analysis of subprime mortgages made in 
recent years shows that 2.2 million families will 
lose their homes to foreclosure -- foreclosures 
that were, for the most part, predictable and 
entirely avoidable through more responsible lending practices," Eakes said.

"As housing appreciation slows down in many areas 
of the country, it is clear that problem will 
only grow worse. All indications are that 
subprime mortgage loans are headed toward the 
worst rate of foreclosure in modern mortgage market history."

This is a big deal because so many mortgages 
today are considered subprime -- it's estimated 
that 20 percent of all home loans fall into this 
category worth $1.2 trillion in outstanding debt.

One reason why this financial hurricane will 
wreak havoc: Many of these home loans started 
with "teaser" rates, special deals that made it 
easier for consumers during the first few years 
of the loan. That process might work as long as 
housing prices continue to rise, but when home 
prices stay steady or decline, the consumer is on 
the hook for increased principal. In the language 
of bankers: The loan is a negative amortization 
loan -- one where the debt burden grows.

And, eventually, the monthly payment will have to 
catch up with that debt burden. Not to mention 
the interest rates that are growing to nearly 12 
percent (in this low-interest environment) per year.

"Lenders and mortgage insurers have long known 
that some home loans carry an inherently greater 
risk of foreclosure than others," Eakes said. 
"However, by the industry's own admission, 
underwriting standards in the subprime market 
have become extremely loose in recent years, and 
analysts have cited this as a key driver in foreclosures."

But is it too late? Can we avoid the hurricane? 
Is there enough evidence to shift course?

We'd better try. A national suitability standard 
might prevent more consumers from being trapped 
in a predatory loan. And perhaps there's a way to 
help people move from unsuitable mortgages into the plain-vanilla-type loans.

But we'd better hurry. Some $600 million in 
adjustable rate mortgages will be reset this 
year, making it even tougher for some people to 
continue making their house payments on time. 
Already, last year Realty Trac reported that more 
than 1.2 million homes were in the foreclosure process.

And these numbers reflect a strong economy, the 
best times ever. We'd better pray it stays that 
way. Our credit democracy is at risk of bankruptcy.


Mark Trahant is editor of the editorial page. 
E-mail: marktrahant AT seattlepi.com.

© 1998-2007 Seattle Post-Intelligencer
`````````````````````
http://www.realtytrac.com/news/press/pressRelease.asp?PressReleaseID=86
>>NATIONAL FORECLOSURES INCREASE IN EVERY 
QUARTER OF 2005 ACCORDING TO REALTYTRAC™ U.S. FORECLOSURE MARKET REPORT
Nearly 847,000 Properties Enter Foreclosure 
During The Year; Florida, Colorado and Utah Post 
Nation’s Highest Foreclosure Rates. <<