The Mortgage Bankers Association says that foreclosures have hit an all-time high as more and more borrowers with adjustable rate mortgages walk away from their homes before their payments increase.
“We’re seeing people give up even before they get to the reset because they couldn’t afford the home in the first place,” said Jay Brinkmann, vice president of research and economics for the Washington-based trade group.”
It comes down to an overstretching of buyers to get into homes they couldn’t afford and an overextending of credit by lenders who were more willing to take risk,” Brinkmann said.
The association says that of the total number of foreclosed homes “23 percent are borrowers who received some form of loan modification, typically a freezing or a reduction of their rate, and then default, he said.” That’s troubling.
U.S. Mortgage Foreclosures Rise as Owners `Give Up’ [Bloomberg]