Georgia Mortgage Defaults Rise; Development Continues
The number of home foreclosures around Atlanta has risen 200 percent since 2000, in part because of an increase in the use of high-interest, sub-prime Georgia mortgage loans, the Atlanta Regional Commission said this week.
Clayton County led the region in 2006 in percentage of overall housing stock in foreclosure, according to data compiled by the foreclosure tracking firm Equity Depot and released by the ARC. Nearly 4.5 percent of all homes in Clayton were in foreclosure that year.
Clayton County ranked second nationwide in obtaining subprime mortgage loans to finance home ownership. Henry ranks third, behind Rockdale County, in its percentage of homes in foreclosure.
Nearly 3.5 percent of all Henry homes were in foreclosure in 2006, Equity Depot said.
According to Equity data released by ARC, the number of foreclosures in Henry county has increased 327 percent from 2000 to 2006, the highest increase in the 10-county metro area. Clayton County showed a 210 percent rise in foreclosed homes, just 2 percent below Fulton County.
The Atlanta Regional Commission attributes the increase, in part, to the popularity of high-interest loans originated by subprime mortgage lenders.
“Lending practices are being revamped and we’re doing away with subprime lending. Interest rates are increasing, people are having to refinance and their payments are increasing which causes them to default on their loans,” said Heritage Bank Mortgage Loan Officer Sherry Downing.
In 2004, the most recent year for which data was available, 38 percent of all home purchase loans in Clayton County were financed in the subprime market, the second highest percentage in the nation. Henry County is listed as 24th on the list with 26 percent.
Realtors say that not all home loans are dangerous, but some types are much safer than others.
“I think that the safest loan type for a consumer is a conventional type of loan,” said Shawn Saylor, a Realtor with RE/MAX All-Stars in Fayetteville. “A 30-year fixed-rate home loan doesn’t have pre-penalties and you know exactly what to expect monthly,” said Saylor, who sells traditional real estate and conducts professional real estate auctions in the Henry, south Fulton, Coweta and Clayton counties.
Saylor said that subprime lending is just one of the reasons why foreclosures have soared in the region.
“Several homeowners have lost their jobs and adjustable rate mortgages are also a part of the problem,” he said. “The interest rates increase faster than the homeowners’ income. The consumer ends up stuck with a loan to pay off and then they try to sell their homes. The house may not sell and then it ends up in foreclosure.”
Despite the number of homes in foreclosure, housing development continues to rise in both Henry and Clayton counties. In 2000 Clayton County had roughly 86,000 housing units, according to Equity Depot, and in 2006 there were nearly 105,000 units. Henry County had about 43,000 homes in 2000 and in 2006 there were nearly 68,000.
SOURCE: The Clayton News