Study Shows Potential for 3.6 Million More Foreclosures - |

Armando Montelongo Team Blog

Study Shows Potential for 3.6 Million More Foreclosures

The current wave of foreclosures is not even halfway through, according to a new study released this week.

Of the borrowers who took out mortgages from 2004-08, 2.7 million (6.4 percent) have lost their homes through foreclosure, as of February. An additional 3.6 million (8.3 percent) are in “immediate, serious risk” of foreclosure, according to Lost Ground 2011: Disparities in Mortgage Lending and Foreclosures, which was produced by the Center for Responsible Lending.

The study also included data on foreclosures in the nation’s largest housing markets. At right is a table of the markets with the highest and lowest percentages of their houses in foreclosure, according to data from the report.

The center’s study said foreclosure rates are worst for borrowers who took out high-risk loan products, including loans with prepayment penalties, hybrid adjustable-rate mortgages and option ARMs.

It also noted that the totals likely represent only part of upcoming foreclosures, since they only include loans originated from 2004-08 and those at immediate risk.

Rates of foreclosures vary across the nation, influenced by a number of factors, the authors said in the summary of the report.

In areas that had weak or moderate increases in home values in the time leading up to the end of the housing bubble, foreclosure rates are highest for low-income borrowers and lowest for higher-income borrowers. Low- and moderate-income borrowers were most affected in places like Detroit, Cleveland and St. Louis.

In areas where values grew more – most notably, California, Nevada and Arizona – foreclosure rates are higher among middle- and higher-income borrowers.

Low- and moderate-income neighborhoods, and neighborhoods with high concentrations of minority residents, have been hit harder as well. Nearly 25 percent of loans in low-income neighborhoods and 20 percent of loans in high-minority neighborhoods have been foreclosed upon or are seriously delinquent.

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