Atlanta Foreclosures

Even though there is a flourishing local economy, many Atlanta home owners are falling short on there mortgage payments and losing their homes at one of the highest rates in the country, offering a troubling glimpse of what knowledgeable foreclosure experts fear may possibly be in store for other sections of the country.

 

The real estate depression in Atlanta and other places are likely to get worse, given that almost all of the adjustable rate mortgages documented in the last three years will be set again with higher rates, said Christopher F. Thornberg, a well known economist with Beacon Economics in Los Angeles. Immediately to follow, borrowers of an estimated eight hundred billion dollars in loans will be compelled in the next year to 18 months to make larger monthly payments, refinance or get rid of their homes.

 

A big reason Atlanta Foreclosures are occurring at an increased rate here is a Georgia foreclosure law that allows lenders to foreclose on properties faster than in any other states. The problems include not only people losing their homes, but also sharp decrease in property valuations, distinctly in blue-collar and low-income neighborhoods.

 

For example, a three-bedroom house close to Turner Field, got a high bid last month of $134,000 at an auction by the bank that gained possession of it. About three years ago, the new home was bought for $330,000.

 

While the sudden increase in foreclosures in other big cities such as Cleveland, New Orleans and Detroit are able to be associated with local economic obstacles, Atlanta more closely reflects the country. Its rate of unemployment, 4.9 percent in the month of May, is low and close to the national median of 4.5 percent. And businesses here are increasing staff, albeit at a slower measure than they were last year.

 

Like others across the country, homeowners here took out aggressive mortgages in the last couple years or so when particular interest rates were low and housing prices were skyrocketing. Now many are falling short — some have lost employment opportunities or experienced other financial difficulties, but many others are not able to refinance by reason of of the fact that their homes are worth less than they paid for them and their credit is today too weak for them to qualify for another loan.

 

So far, the pain has been limited to those on the financial margins, but as more loans are set again to higher rates and home prices continue to slide, more homeowners will be unable to hold a meeting rising payments or to refinance. “This is a process that is starting low and will go high,” said Mr. Thornberg, the economist in Los Angeles.

 

Atlanta also serves as a microcosm for some broader national trends: wages have been stagnant for much of this decade, homeowners have taken on record amounts of debt, and mortgage fraud has been on the rise.

 

“We are a very reasonably priced place,” said Mike Alexander, the chief of research and development at the Atlanta Regional Commission, an organization that provides services for local governments. “But our incomes are comparatively low, and if anything went astray, it would be very difficult for people to keep up their homes.”