Who Spends More Than 38 Percent of Their Monthly Income to Prevent Foreclosure?
According to Associated Press, 9.5 million homes spend more than 38 percent of their untaxed income on paying up their mortgage to dodge repossession. This value imposed the new threshold to qualify for a loan assistance program by Fannie Mae and Freddie Mac.
This financial burden is felt nationwide for 10 percent of mortgaged-homeowners are at least one month delayed in payment of are already in foreclosure.
But the financial difficulty is definitely felt by the minorities.
Minorities suffered from the sudden downward spiral of housing that homeownership is declining.
Among the minorities that spend more than 38 percent of their income to prevent foreclosure, the Hispanic lead at around 33 percent of homeowners in this status. Only 25 percent of Asians and African-Americans and 16 percent of Caucasians are at this status.
Though many Latinos have stable incomes, they end up in sub-prime mortgages because they either have no bank accounts or limited credit history or low credit scores. Since sub-prime lenders do not require proof of income, Latinos end up with costly interest rates, making it difficult to sustain.
Then, 3 of 10 senior homeowners suffer the same 38 percent of their income straight to battling foreclosure. This is common in Vermont, Rhode Island, New York, New Jersey, Nevada, Massachusetts, Florida, Washington D.C. and California.
Single parents are also among the financially strapped. More than 25 percent of Michigan single parents and around 27 percent nationwide allot 38 percent of their monthly in saving their homes from repossession. But the worst is in California where 40 percent of single parents are in this status.
Disappointed housing counselors blamed these homeowners who borrowed more than they can actually handle and those abusive lenders who abuse the elderly, immigrants and ingenuous.
Housing counselors also pointed out that if the Bush administration have taken the foreclosure crisis seriously as early as possible, we would not suffer this much.
Let us just hope that the Obama Administration’s $100 billion financial bailout find may actually help in the controlling foreclosure.
January 23rd, 2009 at 9:33 am
It is unfortunate that many people are placed in this situation. At least the homes in Minnesota are affordable. I am so glad that I live in Minnesota where the homes are affordable and the land is beautiful!