Is this one of the signs of the apocalypse? More Americans cannot live in houses that they bought but couldn’t afford in the first place. That sounds like the end of the world to us. Foreclosure is becoming a sad reality for an increasingly greater number of Americans who over extended their incomes and used those funny financing devices to live in those dreamy houses they could not really afford. Now it seems to be coming back to bite some people in the ass.
Foreclosures in the U.S. are up 53% over last year, and the number of foreclosures is increasing. As you may have guessed, one of the culprits is the ever-popular ARM. Payments are increasing on many of these loans, and – oops – some borrowers can’t pay any more. In California, foreclosures are rising at a rapid pace: they are up 160% over last year.
Before everyone starts to panic that the real estate market is crashing downward, this news may be not so bad. Most of the victims of these foreclosures were those with, well, less than stellar credit and were bigger risks to the banks. And the job market is good, so most Americans with overextended finances can work even more to continue paying for that little piece of suburban heaven.
· Foreclosures Spiked in August [CNN Money]
· Foreclosures Rise in Second Quarter [MSNBC]