Atlanta Pursues Lenders That Caused Foreclosed Homes

by Peter Vernon on cities

Predatory lenders are now being targeted by city officials in Atlanta. This week, the city council of Atlanta has signed a resolution to launch investigations on predatory lenders that contributed to the rise in foreclosed homes for sale across the city.

The city council will employ a private investigation firm to gather data that will help them decide whether they will file lawsuits against certain subprime lenders. Councilwoman Natalyn Archibong, sponsor of the resolution, said the tactics of several subprime lenders have pushed up Georgia foreclosures, putting the state in seventh place in RealtyTrac’s charts on foreclosure rates for the first three months of 2009.

In filing the resolution, the city council is following the efforts of other cities like Cleveland, Baltimore and Birmingham, who have started pursuing predatory lenders in court. The cities believe that the large numbers of foreclosed homes arose partly from the acts of mortgage lenders that offered high-interest mortgage loans to borrowers that cannot afford them and enticed them with no or low down payments and low initial monthly payments. The city council did not name specific subprime lenders.

This month, over 10,000 foreclosed homes will be sold by the court in Atlanta. Based on data from EquityDepot.net, Fulton County accounts for most of the foreclosed homes to be sold.

Last year, Bank of America, which purchased mortgage lender Countrywide Financial Corp., reported to the media that it will spend over $8 billion to reduce mortgage rates and principal balances for about 400,000 borrowers and to settle claims against the company for providing high-risk mortgage loans.

Archibong made it clear that the city council has launched the effort to help homeowners struggling because of the decline of the housing market and not for people who are facing difficulties because they have bought large houses they know they could not afford.

She said there are borrowers whose houses were turned into foreclosed homes because they were enticed with adjustable rate loans that were explained to them in a deceitful ways.

In the first three months this year, Georgia had a total of 28,608 housing units with foreclosure filings. This included 18,938 housing units that received notices of trustee sale and 15,888 bank owned forclosed homes and other lenders. The state’s foreclosure rate for this period is 1 unit in every 138 housing units, representing a 10.66 percent increase from the first three months of 2008.

In March, Georgia had 5,230 foreclosed homes and a total of 13,366 units that received foreclosure filings, representing a 31.23 percent increase from February.

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