Foreclosures on Rise in Mid-West, New Reasons and Predictions Follow

Posted in Foreclosures, August 31st, 2006 |

New research shows that national foreclosure rates are still rising. Foreclosures are up 38% this year, higher than any other quarter in 2005. One of the areas hit hardest by this trend is the mid-west, where automotive industry layoffs are attributed with rendering people unable to make their mortgage payments. Ohio has seen a rate increase of 39%, while Michigan displays a staggering 91% increase in the amount of homes entering the first stage of foreclosure.

In addition to the corporate downsizing and industry layoffs, other factors that have been blamed for rising rates in other areas are once again seen as the cause, namely rising interest rates and levels of people who are in debt in other financial sectors. Adjustable Rate Mortgages are seen as a culprit as well, as people may have jumped into them in order to be able to avoid a large down payment. As the monthly rate rises, many people are caught off guard.

Property values are also on the rise, as well as utility and gas costs, making for an altogether financially stressful time for homeowners with ARMs or who have just lost their jobs. Some experts believe this trend will not only continue, but will probably get worse before it gets better. As ARM interest rates continue to rise, and ARMs taken out in the past year move past their introductory first-year flat rate period, things could get much worse not only in Michigan and Ohio, but nationwide as well.