Today’s Washington Post, “A Bane Amid the Housing Boom: Rising Foreclosures,” describes the rising number of mortgage foreclosures nationally. Sayeth the Post: “Foreclosure rates rose in 47 states in March, according to Foreclosure.com, an online foreclosure listing service. The rates in Florida, Texas and Colorado are more than twice the national average. Even in New York City and Boston, where real estate markets are white-hot, foreclosures are rising in working-class neighborhoods.
“Virginia, Maryland and the District have relatively low foreclosure rates — analysts say troubled owners in those booming markets can still sell their homes before facing foreclosure. Should the nation’s housing bubbles deflate, as many economists and federal officials expect, the foreclosures could prefigure a national crisis. Americans now shoulder record levels of housing debt — more than 8 percent of homeowners spend at least half their income on their mortgage.”
Regulators blame mortgage brokers and bankers who, while promoting the dream of home ownership, have crafted ever-riskier ways for Americans with poor credit to buy homes. Interest-only and adjustable-rate mortgages account for 63 percent of new mortgages. Now policymakers are wondering if the crusade to boost home ownership is backfiring. As debt levels rise, home ownership is destroying wealth for millions of working class Americans rather than creating it.