Foreclosures Bring Down the Value of Neighbouring Houses
October 6th, 2008
Foreclosures are bringing down the value of neighbouring houses that are not in foreclosure. Banks desperate to offload the rising number of repossessed houses are offering absurd discounts that are having a negative effect on the value of houses in the adjoining area. The related law and order problem is also depriving the locality of its value and worth as a safe place of residence.
Before this year draws to a close 7.5 million houses in California will be tainted with foreclosure according to the findings of Center for Responsible Lending. Approximately $14,000 per house on an average will be lost. This will calculate to a total loss of $106 billion in value of properties.
Foreclosures have now reached Santa Cruz. From January to September 699 houses have been sold at foreclosure auctions. This indicates an increase of 300% from what it was the previous year. In 2007 during these nine months 171 houses had been auctioned off. The houses that are in imminent danger of foreclosure are almost double the number of auctions. Notices of 1,475 defaults have been issued.
In California the prediction is that there will be 336,000 foreclosures – the number being more than the combined figures of Florida and New York. According to Center for Responsible Lending this will happen by 30th June 2009.
Across the country the number of troubled loans have reached epic proportions – unprecedented in the history of the nation. The Mortgage Bankers Association had reported that till 31st March 2008, 16% of the sub-prime mortgages were defaulting. The reason for this is that the borrowers had been given and taken loans they could not afford. Also the tightening of credit has affected many negatively. The defaulting numbers in 2006 were triple that of 2000. Loans were given out willy-nilly without giving a thought about how the borrower would be able to pay it back. The assumption was that the price of houses would go on increasing and then it will be a cake walk to get out of the mortgage with a neat profit. But the reverse happened. Prices fell. Loose underwriting standards spelt doom and guaranteed the entry of the foreclosure crisis.
Here arise big questions. While all this was going on were the regulators sleeping? Did the turn a Nelson’s Eye? Why did not Congress step in? Fannie Mae and Freddie Mac are being largely blamed for encouraging a scenario that ultimately led to the foreclosure related housing crisis of today.
- Bouncing Cheques Issued by Title Companies Lead to Foreclosures
- Increase in Foreclosures Prompting Class Action Legal Suits
- Avoiding Foreclosures by Walking Away From Loans are not Without Problems
- Foreclosure Assistance Being Taken on Tour by Housing Advocate
- Washington Mutual, the Symbol of the Foreclosure Crisis, Continues to be in Trouble
- The Consequences of not Paying Mortgages Can be Grim
Related Posts
Posted in
Foreclosure |
2 Comments »
Comments
2 Responses to “Foreclosures Bring Down the Value of Neighbouring Houses”
Leave a Reply
Search
October 9th, 2008 at 8:08 am
The reason for this is that the borrowers had been given and taken loans they could not afford. Also the tightening of credit has affected many negatively. The defaulting numbers in 2006 were triple that of 2000.
October 15th, 2008 at 9:17 am
[...] to protect foreclosure victims. He added that as yet the full impact of the stock market fall and foreclosure crisis has not been felt. New Jersey, if required will buy houses to protect its people from [...]