Sub-prime Is So Six Months Ago

By: Alicia Schuller, Marketing Coordinator, NHS of Baltimore

In the words of sports writer, Dan Cook, “the opera ain’t over till the fat lady sings”, and the last act of our mortgage crisis tragedy is far from curtain close.

The New York Times released an alarming story earlier this month that while the subprime mess appears to be showing the first signs of stabilization, there are a new set of mortgage problems hurling our way—- Alt-A and prime mortgage defaults. That’s right, homeowners with good credit and lower risk loan terms on their mortgages are now falling delinquent on their payments and facing foreclosure in growing numbers.

The main reasons-- loans known as Alt-A, which allow people with good credit to procure mortgages based on their credit scores, without proof of income or assets. Furthermore, homeowners who took out prime loans during the housing boom four or five years ago, with low interest and no obligation to pay on the principal, are now facing higher interest rates and principal payments two or three times higher than they were once accustomed to. Add this to refinancing difficulties as lenders tighten their belts, rising costs of food and services as inflation climbs to a new high and the rollercoastering price of gasoline and we have an equation that offers no refuge for struggling homeowners.

Maryland has seen an increase in foreclosures of more than 17% over the last year, with one of the hardest hit areas being Baltimore City, which saw foreclosures increase by 30% in six months alone. To combat these climbing numbers, we launched three new programs in 2008, which aim to keep low to moderate income homeowners out of foreclosure, educate prospective homebuyers on how to navigate the market and make good decisions and offer fair, responsible lending opportunities for first time homebuyers as well as those in need of home rehab.

These programs are our Emergency Bridge Loan, Homebuyer and Financial Fitness Education and low interest mortgages for first time homebuyers, sponsored by the Community Development Administration (CDA), Neighborhood Housing Services of America (NHSA) and Provident Bank.

As foreclosure numbers continue to rise due to prime and Alt-A delinquencies, NHS of Baltimore expects to be at the forefront of lending and consumer education in order to keep families and individuals in their homes and help sustain the Baltimore region through homeownership. We are Housing and Urban Development (HUD) certified to counsel current and prospective homeowners on the correct course of action and offer help that is catered to suit their individual needs. Our staff offers friendly, professional support.

Need to talk to someone about your delinquency or foreclosure status? Want to register for a class? Give us a call today. 410-327-1200