Foreclosure Rates Rise Across the United States
STEVE INSKEEP, host:
The business news starts with an increase in home loan foreclosures.
Even as the economy shows signs of strength, the rate of home foreclosures continues to rise. And that is especially true in the Midwest.
Experts say many homeowners are either taking on too much debt or have loans with variable rates that keep moving upward. NPR's Audie Cornish reports.
AUDIE CORNISH reporting:
While national foreclosures were up 38 percent this quarter, cities in the so-called Sunbelt and Rustbelt are seeing the largest increases. Indianapolis, Dallas, and Atlanta topped the survey by online foreclosure database, RealtyTrak.
That's no surprise to Thomas Davidoff, business school professor at the University of California, Berkeley.
Professor THOMAS DAVIDOFF (Professor at Haas School of Business, University of California, Berkeley): Mortgage payments have been increasing, and in the cities you mentioned, house prices have not been increasing particularly rapidly. So that means the cost of paying off the mortgage is rising, but the benefits - that you get to keep your home if you pay your mortgage - aren't rising.
CORNISH: And the result is that more homeowners in those cities are defaulting on their loans.
Davidoff says another explanation is the high number of people who bought their homes using adjustable rate loans with tantalizingly low introductory rates.
Mr. DAVIDOFF: People are coming into the end of the teaser periods just at a time when short-term interest rates have gone up, up, up, which means that people have much higher mortgage payments than they did last year, because they're moving to the current interest rte, rather than the interest rate at which they closed the loan.
CORNISH: Gulf Coast residents still dealing with the financial fallout from last year's hurricane season actually made out much better. That's because there's a federal moratorium on foreclosure in those areas.
Audie Cornish, NPR News.
NPR transcripts are created on a rush deadline by a contractor for NPR, and accuracy and availability may vary. This text may not be in its final form and may be updated or revised in the future. Please be aware that the authoritative record of NPR's programming is the audio.