The list for April's foreclosures has just been tallied and the DFW market is up 18% for April compared to April last year. For the year, foreclosures are up 15%. The main counties break down as follows:
Dallas- 11%- up 1597
Collin- 40%- up 456
Denton- 20%- up 333
Tarrant- 20%- up 1066
Rockwall- 29%- up 63
The main reason for this many foreclosures in the Dallas market is the amount of adjustable rate mortgages that are starting to adjust. Two and three years ago, people were getting ARMs where the rate for those first couple of years were fixed. In their head, they're not realizing what that really means after it's not fixed anymore. I work hard at explaining these loans to my clients, as best I can without being a mortgage person, so none of my buyers have ever been in a foreclosure situation, knock on wood.
The number of subprime loans that foreclose compared to prime loans that foreclose is substantial. At the end of 2006, 4.5% of subprime loans foreclosed compared to only 0.5% of prime loans... there is a reason those buyers couldn't get a traditional loan and needed a subprime product. It's because their scores were low, probably from having collections and late pays... what made these lenders think the borrowers would make their mortgage time consistantly and on time?
Thus far, year to date for 2007, we have had 14,307 foreclosures, which is 15% up from last year during this same time.
Yes, sadly, the ARMs adjusting are a huge factor.
These folks were given a chance at the American Dream by the relaxed guidelines.... but most took no steps to improve their credit ratings for that inevitable refi