Motor City Driven Under?

After reading the paper today I was a bit surprised at the high number of foreclosures coming out of some areas around the country. Detroit appears to be in a real crises. Roughly 4.9 percent of the households in the Detroit metro area were in some stage of foreclosure in 2007, which is 4.8 times the national average; according to the study released by mortgage research company RealtyTrac Inc.

Stockton, Calif., ranked second with about 4.8 percent of its households in some stage of foreclosure, while the Las Vegas metro area was third with a 4.2 percent rate. In all, 72,616 filings on 41,273 properties were reported in the Detroit metro area, which includes Livonia and Dearborn. The foreclosure rate represents a 68 percent jump from 2006.

In Stockton, 22,184 foreclosure filings were reported on 10,608 properties last year, up 271 percent from 2006, RealtyTrac said.

The Riverside-San Bernardino metro area east of Los Angeles was ranked fourth, with 102,506 filings on 51,739 homes, a rate of 3.8 percent.

Sacramento was ranked fifth, with 3.1 percent of its households reporting late payments.

The other California metropolitan areas in the top 20 were Bakersfield, ranked seventh; Fresno, ranked 14th; and Oakland at 16th.

The Las Vegas metro area, which also includes Paradise, Nev., reported a total of 59,983 foreclosure filings on 30,375 properties in 2007.

Ohio, which has also been racked by high unemployment, had four metro areas among the top 20, including Akron at 12th, Dayton at 15th and Toledo at 19th.

The metro area comprising Cleveland, Lorain, Elyria and Mentor was ranked sixth, with some 2.9 percent of all households in some stage of foreclosure.

Miami ranked eighth with a 2.7 percent rate, the highest among all metro areas in Florida. Fort Lauderdale was 10th and Orlando was 20th.

The other areas in the top 20 were Denver-Aurora, Colo., at No. 9; Atlanta-Sandy Springs-Marietta, Ga., at No. 11; Memphis, Tenn., at No. 13.; and Indianapolis at No. 18.

With all of this happening, I can't say I understand why banks don't simply re-negotiate the loans with their clients instead of following through with converting those ARM loans to a full amortized loan; knowing it will lead to default. Most of these homes will end up in the hands of overseas investors buying them in bulk for 50-70 cents on the dollar from the banks. How sad.