Why does the foreclosure problem seem to stop at state lines?

[spinbaby]

Look at this map. Why do Ohio and Tennessee have a problem whereas Kentucky does not? Does Kentucky have stricter regulations for lenders?



http://weblogs.baltimoresun.com/business/hancock/blog/2008/01/national_foreclosure_map_count.html

On edit: added question mark.

[ingac70]

1. Places that went through the "boom"...

when houses were selling like hot cakes are the ones feeling the foreclosure pinch now.

[spinbaby]

2. When did Ohio and Tennessee boom?

I must have missed it.

[ingac70]

5. I live here in TN...

We had a housing boom.

[gasperc]

9. Here in metro Detroit, MI there was also a boom

although prices didn't spike as sharply as other states mainly because of the very sluggish job growth, housing was one of the few sectors that continued to grow robustly, as did housing prices.

[tridim]

3. No idea, but that's a really good question.

I know the difference between Colorado and Kansas is that homes are still affordable in KS.

[havocmom]

4. My guess is lending laws vary greatly. Would be interesting to compare your map

with one showing amounts of money the home loan industry gave to state legislators. Bet one would notice a similarity.

[jojo54]

6. Probably something to do with job loss?

I don't know the exact numbers on job loss in individual states, but that could have something to do with the foreclosure rates.

[gasperc]

7. It may indicate the prevalance of mortgage brokers

things like pay day lenders, and certain type of the mortgage broker business fall under state control and regulation. How each individual state regulated these entities may explain how the fraud, high pressure lending practices and relaxed appraisal standards played a role in containing or expanding the problem.

The crisis is very muti-pronged. High prices drove or encouraged too many people to accept an adjustble rate loan over fixed on the hopes that they could refinance later, none of which ever anticipated the possible decline in home prices, neither the lender or borrower. Mortgage fraud has been prevalent in many cases. Many banks operate locally or within just one or a few states, so they may be concentrated in the certain states where prices have declined sharply, and with it defaults.

[Anywho6]

8. I was asking myself the same question

I'm originally from KY--lived there for 35 years before moving to CA. I had recently seen a similar article and noted that KY's foreclosure rates, when compared to some of the harder hit states, were pretty low. I still have a large family there (one of my sisters is an executive with the Home Builders' Association of Louisville), but I haven't had a chance to ask anyone their opinion on this.

I know they were experiencing an increase in new home construction, sales and property values during the peak like everyone else. I was wondering if the lower foreclosure rate could be due to more people just being inclined to live within their means (lots of frugal people there by way of their German heritage!). It's just a theory. Very interesting question.

[gasperc]

10. not necessarily frugal, but if they avoided ARMs, options

and other exotic home loans, they were probably able to escape losing their house. The crisis is being driven more so by a double squeeze than anything else. The sharp jump in people's payments start the cycle, once the homeowner tries to re-finance and is declined, it triggers phase two, try to sell. Once the market is flooded with sellers, phase 3 is triggered declining house prices, as time goes by, the homeowner can not make the higher payments, they can not sell and sadly, sooner or later, the home falls into foreclosure. Another thing, this was all very, very predictable. More and more loans were being sold as adjustble rate or teaser rate, at the same time that interest rates were bing pushed up. It was obvious that sooner or later, many, many borrowers would be trapped with unaffordable payments with no evidence of comparable wage increases to absorb the spike.

[uberblonde]

11. Probably more open space to develop.

You can only build houses if you have someplace to build.

Plus, different states and counties have 10-year tax abatements favoring new construction.