Foreclosure Risk Rising, But Only in Key Areas

Daily Real Estate News October 19, 2007

The risk of foreclosure continues to climb, but it is concentrated in regions of the country with a souring economy or in areas where many homes were financed with subprime mortgages, according to a First American CoreLogic report.The Core Mortgage Risk Index rose 1.6 percent form the third quarter, which is a slower rate of growth than earlier this year, says Mark Fleming, chief economist.Fleming says the findings show that the brunt of the anticipated rise in foreclosures won’t be felt nationwide. The burden will fall on areas where local economies are struggling because of lay-offs, Fleming said.It doesn’t matter to a home owner in Detroit — the riskiest mortgage market — whether he has a burdensome adjustable-rate mortgage or a more manageable fixed-rate loan if he no longer has a paycheck, Fleming says.In contrast, rising foreclosures in California and Florida reflect a correction in home prices, Fleming says.Overall, fewer than 2 percent of mortgage borrowers are at risk of foreclosure. In much of the rest of the United States home prices are stable, rising at about the rate of inflation. "As long as people have jobs there is little risk of delinquency and ultimate foreclosure," Fleming says.

Source: Reuters News, Jim Christie (10/18/07)