Albany -- A record spike in national home foreclosures is sending shock waves through the housing and loan industry. Nationwide, lenders are foreclosing on one in every 200 borrowers. The reason - higher interest rates on variable loans.
Bankruptcy Trustee Walter Kelley said he was shocked by the newspaper, listing the property foreclosures in Dougherty County. Walter Kelley said "I've been in it 28 years, and I would say this is at an all time high."
Page after page of foreclosure notices in Albany. Nationwide mortgage foreclosures are at a 37 year high. The Fed says late mortgage payments rose more than two percent for all banks last quarter, to a four year high. Kelley said "the people who can least afford some of these high interest mortgages are the ones who are going to get hurt the most. And that's what is sad to me."
Foreclosures are usually high during a recession or high unemployment. But the current rash is caused largely by rising interest rates and in some areas falling home prices.
Consumer advocates say subprime loans were given to borrowers who can not meet the payments now that the variable rates have increased. Kelley said "you start off at an artificially low interest rate, to get you in there. Five and a half or six percent. After a year or so, then that interest rate bumps up, particularly if you've been late."
Kelley says people facing foreclosure need to work with their lender, because they do not want all these homes to have to resale. But more Americans are unable make their mortgage payments on risky, high interest loans. And the number of foreclosure notices continue to skyrocket in South Georgia.
While Fed Reserve Chairman Ben Bernanke warned that rising mortgage foreclosures are likely to get worse, a new industry of real estate investors is moving in, buying foreclosed property at bargain prices.