Posted Jul 09, 2007 11:22 pm CDT
In the latest chapter of a sad story that could soon be commonly told throughout the country, an increasing rate of mortgage foreclosures in and around Atlanta is creating a business boom for lawyers and others involved in the litigation process. But meanwhile, it is apparently depressing home values.
Because of a state law that puts such litigation on a fast track, experts fear that what is now happening in Georgia—a state with one of the highest foreclosure rates in the country—could be a harbinger of similar problems elsewhere that will take longer to reach the nation’s courtrooms, reports the New York Times.
Despite an economy that the newspaper describes as “vibrant,” Atlanta is seeing a lot of foreclosures—which may result in homes being sold at less than half of what proud owners paid when they were first purchased only a few years ago, the Times reports. Many foreclosures may be attributable to aggressive lending practices that put homeowners in adjustable mortgages with attractive initial terms, but resulted in sticker shock when bigger bills arrived in their mailboxes a few years later as interest rates rose and artificially low initial payments ended.
However, mortgage fraud in the Atlanta area—in which organized rings targeted entire neighborhoods and condominium projects—may also have played a role in artificially inflating prices, according to an earlier ABAJournal.com post.
Among recent purchasers at Atlanta foreclosure auctions was Mark Rollins, a real estate agent who paid $78,000 for a house southwest of downtown that sold for $255,000 three years ago. He plans to live in the house for a few years, fix it up and resell it for $150,000. Asked by a Times reporter why it sold for so much more such a short time ago, he cites three factors: “The market was hot, the interest rates were low, and they were giving all kinds of deals to people.”