Foreclosures Boom in Virginia

If a home mortgage offer looks too good to be true, it probably is.

Many Virginians are learning the hard way as their newly bought homes undergo foreclosure, thanks to subprime mortgages (mortgages given at high interest rates to individuals with low credit scores), interest-only and adjustable rate loans and other financial reasons.

From January through June 2007, there were 7,430 foreclosure listings in Virginia, representing one foreclosure for every 427 households, according to RealtyTrac, a leading online foreclosures publisher. Most frighteningly, the 2007 data represents a 204 percent increase from the last half of 2006, and a 289 percent increase over the first half of last year.

The national numbers are also on the rise: Foreclosure activity is up 55 percent nationwide.

The good news is that Virginia is ranked 34 among the states for foreclosures. Nevada, Colorado and California have the highest rates.

The foreclosure situations “likely will get worse before they get better,” said U.S. Federal Reserve Chairman Ben Bernanke in his economic report to Congress on July 18, 2007.

Rising interest rates, falling home values and the consequent slew of foreclosures have forced many subprime mortgage lenders out of business. And predatory lending practices — in many parts of the country, targeted at homebuyers who cannot speak English and don’t understand the documents they are signing — are wreaking havoc on families’ financial states.

Federal legislators and regulators are taking notice. In July, U.S. Rep. Spencer Bachus (R-Ala.) introduced the “Fair Mortgage Practices Act” to establish fair mortgage practices and take aim at the subprime mortgage industry. The legislation would curb predatory lending practices and establish a national system for licensing or registering residential mortgage lenders.

For more information on foreclosure rates, visit www.realtytrac.com. An overview of the subprime mortgage meltdown is available on Wikipedia at www.wikipedia.org.