As in other communities around the country, foreclosure rates in Kansas have been steadily increasing over the last couple of years. Subprime foreclosure rates in Wichita, although high, didn’t show a clear upward trend in 2008 and may signal that the subprime crisis has peaked here.
While the subprime mortgage situation in Kansas is far less dire than in coastal markets, many homeowners in Wichita have fallen behind on their mortgage payments because of the adjusting mortgage rates. At present, 554 houses are in foreclosure in Wichita — more than usual and at rates below the national averages, Wichita looks pretty good compared to the soaring rate of foreclosures in the nation as a whole. The foreclosure rate in Wichita among outstanding mortgages was 0.74 percent during July, up from 0.69 percent from a year earlier. That was lower than the national foreclosure rate of 1.6 percent.
According to a January report by the Center for Responsible Lending, lenders wrote more than 25,000 subprime mortgages in Kansas in 2005-06. In January of 2006, about 20 percent of subprime mortgages in Kansas were late on payments and 5.5 percent were in foreclosure, according to statistics from the mortgage monitoring firm First American CoreLogic. By July of this year, nearly 35 percent of subprime Kansas mortgages were behind in payments and foreclosures statewide had doubled to 11.5 percent.
The idea of being upside down on a vehicle is not that new. This commonly occurs when a consumer makes the decision to purchase a new vehicle before they have paid off their existing vehicle. As a result, the balance of the loan on the existing vehicle is added to the note for the new vehicle. The result is that the consumer owes more on the new vehicle than it is actually worth.
Today, however, many homeowners are finding they are now upside down as well on their mortgages. This didn’t happen because they bought a new house and added in the cost of their old home to the new mortgage. This situation occurred in many cases because of the rapid rise of home values in many areas followed by the real estate market crash that sent home values subsequently spiraling downward.
If you find yourself in this situation, you may be wondering what you can do. Options are often based on whether the homeowner is able to continue making their monthly mortgage payments. While some are able to pay their monthly mortgages, especially if they have a fixed rate mortgage, that is not the case with others who took out adjustable rate mortgages.
Homeowners who can still afford their monthly mortgage payments and who are not feeling the pressure to sell due to employment reasons may find they are better off by riding out the market decline. There is a wide belief that once the market bottoms out it will begin to rebound. If that occurs, these homeowners could still be poised to make a profit on their home once the market does rebound.
Other homeowners are not so fortunate; however. In some cases, homeowners simply have no choice but to move now rather than wait as a result of relocation or job loss. Homeowners who have adjustable mortgages may also find they are simply no longer able to afford their mortgage payments as they continue to rise. These homeowners are now facing the bitter reality of foreclosure when they are not able to pay off their debts or refinance their home loans because of tightening loan restrictions.
Homeowners are also facing the reality that their options are reduced because they have little if any equity in their homes. Some homeowners find themselves overleveraged with either zero or NO equity in their property as a result of using their homes as ATM machines, having drained all the equity out that they had accumulated over previous years. Others have little or no equity because during the housing boom it was quite common for many buyers to purchase homes with very little, if any, down payment. At the time it seemed like a good deal; however, today it is causing significant problems as housing values continue to decline.