More than 22 percent of all area homes purchased with a subprime mortgage in 2006 will be forced into foreclosure, according to a report from the Center for Responsible Lending.
This is the ninth highest average inthe country, behind communities in California and Nevada and Ocean City, N.J. According to the report, drops in housing prices after a long period of solid growth will lead to a swift increase in the number of owners who are forced to forfeit their homes because they are no longer able to make mortgage payments.
“It’s driven by the cooling of the housing market in areas where housing prices were rising rapidly,” said Sharon Reuss, a spokeswoman for the group. “Things are just slowing down.”
Reuss added that in areas like Prince William County, where subprime mortgages make up more than a quarter of all home loans, a 22 percent foreclosure rate would be disastrous.
“There’s a real human cost when foreclosures occur,” she said. “It means there are social service issues at play. People are in need of housing and support to continue their lives the best they can. There’s a real human cost.”
“A lot of people are using their home like an ATM,” Reuss added. “Their borrowing against the value of their house” and have trouble making payments.
