Mortgage: Forclosures up in several Chicago neighborhoods

Hope everyone had a teriffic Sunday... the weather turned out good and you're probably enjoying the long weekend... sadly, I've been catching up today (did manage a morning read of the paper and a run however).

So, while scanning the news, I caught this story by Crain's concerning rising forclosure rates around the City (you may have to register for the free trial to get this story). This was covered by the Tribune not too long ago, by ABC nationally, and has been on the radar screen of cautious "do-gooders" for quite some time.

Well, the do-gooders may have been right. It seems folks either did not understand the implications of complex and creative mortgages or just did not have the fiscal fortitude to hack it. Throw in your usual dose of unfortunate events and ... Whammo! Forclosure are up in some neighborhoods.

But before a national emergency is declared, there are a couple numbers to look at.
-Sub-prime mortgage foreclosures are down.
-Prime rate mortgage forclosures are up.
-The net increase of forclosures in Chicago is 1%.

This from the story:
"In Chicago, foreclosures on prime-rate mortgages — home loans for borrowers who qualify for market interest rates rather than the higher rates paid by those with spotty credit — increased 43% in 2005, the survey shows.

More alarmingly, the NTIC analysis found a 93% increase in foreclosures on prime-rate mortgages that had been issued less than two years before. Some 82% of those problem mortgages were ARMs or loans with scheduled payment increases, known as balloons."

So, it looks like the ARMs and baloons are having an affect. The ABC story (I believe it was on Nightline) featured those unscrupulous characters that buy forclosure homes at auction, or swoop up a home from a person in default... before the process hits forclosure.
Just when I thought this game was getting too crowded it seems there will be more homes available for purchase. (If you would like to buy a home this way, give me a call... it's a tough game but doable. Also, I know some folks who do purchases for investors).

ABC also stated that forclosures are down in historic terms, lower than the 1970s... the last big spike nationally. So, know your mortgage product (ARMs can be good, people), buy less house and move up as you build your finances over time.