Bank Foreclosed Home, Default Rates Rose in Connecticut

by Donald Hanz on States

Loan delinquency and bank foreclosed home rates in the state of Connecticut rose to their highest levels in 30 years.

As of end of June 2009, about 31,979 homeowners were either 3 months or more delayed in their mortgage payments. The figures represented 6 percent of the total mortgage loans in the state, or one out of 17.

In March, the number of foreclosure properties increased by 5.3 percent, representing one in every 20 mortgages. Industry analysts said that the percentage point was still lower compared with the 8 percent nationwide.

They are pointing to the rising unemployment rate as the culprit in the rise of delinquency and foreclosure rates not just in the state but in other areas of the country. They predicted that the number of foreclosed homes will continue to increase in the state and across the country in the coming months if no reduction in the unemployment rate will happen soon.

They predicted that the employment rate will start to pick up next year and they are not sure how it will affect Connecticut’s economic recovery.

They said that recovery would be very difficult for struggling homeowners who have lost their jobs and are missing on their mortgage payments, adding that in some cases, recovery would come too late to troubled homeowners.

Early in the recession, marginal buyers or borrowers who purchased their properties by taking out subprime loans accounted for the bulk of homeowners who went into foreclosure. But the rising unemployment change the landscape of the housing crisis as an increasing number of creditworthy borrowers who have fixed-rate mortgages are finding themselves at risk of foreclosures.

Since the start of the recession, the number of people in Connecticut who lost their jobs reached 76,000 and industry analysts are expecting that unemployment will peak at 100,000 next year despite moderate pace of monthly job losses.

Industry analysts believed that Connecticut’s housing market will remain in a stupor state unless the problem of rising unemployment will be addressed first. An increase in home prices would help in alleviating the financial difficulties being experienced by homeowners but price improvements would only occur months after the employment rate started to pick up.

So far, Connecticut’s mediation program was able to help about 2,078 distressed homeowners avoid foreclosures and remain in their properties.

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