Alabama foreclosures rise 82%

Alabama Foreclosure & Real Estate Information

Article Abstract:  Foreclosures in Alabama increased a whopping 82 percent this period. This increase even higher than the national foreclosure rate increase of 75 percent. For the entire AL foreclosure article, please read below:

Home foreclosures in Alabama vaulted 82 percent last year, after shaky borrowers defaulted on mortgages extended during the housing boom that ran from 2001 through 2005.

There were 7,903 Alabama mortgage foreclosures filings in 2007, according to California-based RealtyTrac Inc., which compiles nationwide real-estate statistics. The 82 percent foreclosure increase from 2006 was worse than the national increase of 75 percent, though Alabama ranks low among the states in filings.

It is part of the so-called subprime lending bubble, which has ended with tens of thousands of borrowers with little cash and poor credit defaulting on their loans. The defaults have pressured lenders, homebuilders and general contractors who depend on home sales for their profits.

It has also put up for sale scads of homes, which are repossessed by lenders when borrowers default, and quickly put back on the market.

"It's a great time for the first-time homebuyer," said Tom Duke, a real estate agent for Hoover's The Realty Group. "There are a lot of houses out there right now."

The dramatic rise in foreclosures has its roots in 2001, when the Federal Reserve lowered short-term interest rates 11 times to settle at 1.75 percent. By 2003, mortgage denial rates were at 14 percent, less than half of what they were five years earlier.

By 2004, the loans to borrowers who didn't qualify for mortgages under stricter lending standards had swollen the U.S. home ownership rate to 69.2 percent, an all-time record, according to the Census Bureau.

While foreclosures have jumped, they represent a tiny fraction of households. In 2007, the 7,903 Alabama foreclosure filings equaled just 0.27 percent of state households. The national foreclosure rate was 1 percent of households.

Alabama's 7,903 foreclosure filings last year ranked 37th in the country.

Nevada had the most foreclosures - 66,316 - and the highest rate with 3.4 percent of homes in some stage of foreclosure. Vermont had the fewest. Only 61 people in the Green Mountain State defaulted into foreclosure.

In December, there were 693 foreclosure filings in Alabama, a 5 percent increase from November, and a 6.3 percent rise from a year earlier. Both figures were better than national numbers.

In the United States, the 215,749 December foreclosures were 6.8 percent higher than during November, and 97 percent higher than a year earlier. In California, there were 53,292 filings in December, a 322 percent increase from a year earlier.

Duke, the Birmingham real estate agent, said lending standards have changed from two years ago, when little cash or credit rating was needed to buy a new home. He said buyers should expect to make a down payment and to have a decent history of paying their bills on time.

He also said people buying a foreclosed home should check it out thoroughly. Duke said some people who have defaulted remain in their homes for months during foreclosures proceedings, and sometimes neglect maintenance chores.

E-mail: rhubbard@bhamnews.com

 

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