| Subprime troubles hit home
Subprime-mortgage lenders nationwide are in the midst of a meltdown, and the effects are starting to ripple through Ohio. Mortgage lenders are closing offices and getting pickier about who can qualify for a loan, while regional banks are facing deflating bottom lines and selling their subprime-mortgage divisions. It's clear that the subprime-loan market, which often involves lending money to those with questionable credit and has been blamed for Ohio's skyrocketing foreclosure rate, is shrinking. "The mortgage industry is experiencing a significant contraction," said Brendan McDonagh, CEO of HSBC Finance Corp, in testimony to the Senate Banking Committee. "The subprime market has lost 20 percent of its origination capacity" just from lenders going out of business, he said.
House prices post marginal rise
The median house price rose marginally in March to 580,000 rand from 570,000 rand in February, recording a 1.8% month-on-month growth; and year-on-year growth moderated modestly to 8.4% from 8.6% in February, the Standard Bank Property Gauge showed. The five-month moving average rate, which is one of the measures used to represent trend growth, remained flat at 7.7% in March from 7.6% y/y in February. "Serious concerns about the health of the US housing market and the impact on local house prices have prompted speculation that house prices are likely to feel the impact of the housing market deterioration in the US," the banking group said. It added that losses in the US housing market, especially the so-called "sub-prime" market, which comprised mortgages to borrowers with small deposits, bad credit histories or no proof of income, were now starting to surface.
Predatory Lenders and California’s Foreclosure Crisis
Predatory mortgage lending drains family savings, eliminates the benefits of homeownership for a growing number of Americans, and often leads to foreclosure. Recent studies estimate that predatory market lending costs Americans $9.1 billion each year. The Center for Responsible Lending (CRL) recently issued a report projecting a failure rate of as high as 21.4% for 2006 sub-prime loans in California, a level exceeded only by Nevada and Washington, D.C. Thousands of California consumers that were suckered into these agreements with initially fixed interest rates are now seeing their loans reset to a much higher level. Recent data compiled by DataQuick Information Systems in January 2007, indicates that default notices jumped 145% in the last three months of 2006, accelerating a trend that began in late 2005 as home sales started to cool.
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