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Those sucked into the sub-prime mortgage fiasco are systematically being spit back out as the Anderson County’s torrid foreclosure pace closes in on 100 for the year.
Through November there have been 94 foreclosures in Anderson County, and at least six more are scheduled for December, according to Lawrenceburg attorney Bill Patrick, who presides as master commissioner over foreclosure sales.
Patrick said there were five foreclosures scheduled for last Friday, but three were temporarily postponed.
“They’ll be back,” he said. “One was due to a bankruptcy filing. It won’t stop it, but will slow it down.”
The problem here mirrors the nationwide sub-prime problem that has resulted in millions of families losing their homes. Simply put, millions of people over the past several years were allowed to borrow 100 percent of a home’s value and roll into the mortgage normal closing costs and fees.
Not only were most upside-down on the home once they moved in, the problem was compounded because most signed adjustable rate mortgages that allow mortgage companies to dramatically increase interest rates between three and five years into the loan.
“These in Anderson County are practically all secondary market loans — sub-prime loans,” said Patrick. “The overwhelming majority had no down payments and variable rate loans.”
Patrick said one person who lost a home last week saw his interest rate skyrocket from 6 percent to 11.5 percent.
“The monthly payment went from $600 to $2,000,” he said. “Of course most of that payment is interest and it just leaves people strapped.
“If someone was spending 35 to 40 percent of their income on their mortgage, all of a sudden it goes to 100 percent of their income and they just can’t do it.”
Patrick said few if any of the county’s residential foreclosures are from local banks.
“It’s rare to see any of the local banks foreclose,” he said. “They generally only loan about 80 percent of a home’s value. Even if they have a rate that’s adjustable, the customer usually has the financial strength to make the higher payments.”
The foreclosures have left a glut of vacant homes across the county, owned by finance companies who can’t find buyers for them.
In years past, finding buyers for foreclosed homes wasn’t nearly as difficult as it is today. Patrick said. Contractors looking for fixer-uppers would often attend the sales, as would other prospective buyers.
“Most of the people showing up to bid now are from banks,” he said.
As for the nearly 100 families who have been booted from their homes, Patrick said he isn’t sure where they end up.
“I don’t know, because they are usually gone before the foreclosure is finalized,” he said. “A lot of them tend to vacate the home as soon as the foreclosure process begins. I sometimes tell them that it isn’t necessary because the process can take six months, and they can save money to go somewhere else.”
Patrick said he doesn’t expect to see a decline in the foreclosure rate anytime soon.
“We do most of Farm Credit Service’s credit work,” he said.
“They are telling their loan officers not to expect an upturn in residential housing loans until 2011, so it looks like it could be flat for another two years at least.”