Delaware Mortgage Defaults on Record Pace
Delaware mortgage defaults are soaring toward record highs and are likely to keep increasing into 2008, state banking officials say.
Foreclosure filings in all three counties stand at 2,395 so far for fiscal year 2007, already topping last year’s total of 2,228, according to Superior Court records in each county. With a month left in the fiscal year, Delaware is just 76 filings shy of its record high - 2,471 filings in fiscal year 2003.
“At this juncture, each county is projected to break a record this year, and Sussex has already broken” its record, said Gerry Kelly, Delaware’s deputy bank commissioner for consumer affairs. “And we still have a year to go in what we see as potential growth in this problem.”
Foreclosure filings in Sussex County hit 408 for the 10-month period from July to the end of April, breaking the record of 396 filings for fiscal 2003. New Castle County reached 1,618 filings in April, closing in on its record of 1,657 for fiscal 2005. And Kent County recorded 369 home mortgage default filings in April, compared with its record high of 390 in fiscal 2003.
Kelly estimated that by the end of the fiscal year June 30, filings in Kent, Sussex and New Castle counties could reach 2,000, 488 and 440, respectively - a potential 18.5 percent increase over the state’s record high.
Gladys B. Spikes, a housing counselor at Housing Opportunities of Northern Delaware in Wilmington, said her agency is working with hundreds of Delaware housing market families who are in the foreclosure process or have already lost their homes. Calls from clients seeking to avoid foreclosure “have quadrupled” in the last couple of months, she said.
“Mostly what’s happening is that these exotic mortgages are coming due,” said Spikes. That includes adjustable-rate mortgages such as so-called 2/28s, a 30-year loan with a fixed rate for two years that then resets to an adjustable rate, Spikes said.
When the home loan rate adjusts, homeowners find they cannot keep up with the payments. “They’re beginning to come forward now. You can’t have a disaster of any sort. Nobody can get sick. I’m seeing a lot of folks coming to us where that’s happened.”
Economic hits such as the closure of DaimlerChrysler’s Newark plant may also be contributing to the rise in foreclosures in Delaware, said Ira Goldstein, policy director for the Reinvestment Fund, a Philadelphia-based research firm.
Delaware’s situation is still better than the national average, Goldstein said.
By the end of 2006, the Mortgage Bankers Association reported 1.73 percent of loans in Delaware were more than 90 days delinquent or in the process of foreclosure, Goldstein said, compared to the national average of 2.21 percent.
However, with 6.46 percent of bad credit home loans in Delaware showing up as 90 days late or more during the last quarter of 2006, the news on foreclosures is not likely to improve anytime soon.
“That’s your ghost of Christmas future,” said Goldstein, of the delinquency numbers. “The 90 days or more delinquent are certainly likely to go into foreclosure. … So to me, it means that there are a bunch of these things that are going to hit Delawareans. … From a state perspective, you have to be concerned.”
SOURCE: The News-Journal