Indiana has 10th highest foreclosure rate in U.S.

Housing foreclosures are sweeping the country, and Indiana is no exception. \nIndiana ranks 10th in the country for the highest number of filed foreclosures, RealtyTrac Inc. spokeswoman Daren Blomquist said. RealtyTrac Inc. is a leading online database for foreclosure properties nationwide. \nIndiana foreclosure rates have increased by 41 percent since August 2006, Blomquist said. The foreclosure rates for the country as a whole have increased by more than 50 percent. \n“It’s becoming an issue that is dragging down the real estate market,” Blomquist said. “Foreclosures tend to be a lagging indicator, because they usually happen when the market is already in trouble.”\nDuring a Wednesday news conference available on the Democratic Senators’ Web site, Democrats called on the Bush Administration to “join them” in working to end this problem. \n“This is a national crisis,” said Senate Majority Leader Harry Reid during \nthe conference.\nSenate Democrats are lobbying for several new programs, such as increased funding to prevent foreclosures and appointing a federal coordinator. \n“It’s too bad it has taken so long for us to realize we had a crisis,” Reid said. “The Federal Reserve has had more than 15 years to see a problem developing, and they simply didn’t react when they should have.” \nAnne Baldwin, a representative from the Indiana Association of Realtors, said subprime mortgages are a big reason for the rise in foreclosures. Subprime mortgages are offered to people with lower credit scores. Baldwin said these types of loans have a higher interest rate than conventional loans and often come with an adjustable rate mortgage.\n“Across the board, the subprime loans have hurt a lot of people, because they’ve gotten them into homes they shouldn’t have qualified for in the first place,” Baldwin said. “Because their credit is less than perfect they are directed toward a subprime loan, and they get into loan terms that can absolutely mystify an inexperienced borrower.” \nBaldwin said people finance with adjustable rate mortgages to cover the entire price of their homes, and over the course of two or three years the interest rate can rise so dramatically payments become unaffordable. \nWhen people borrow the money to cover the entire cost of their homes, coupled with an adjustable rate mortgage, they build up no equity. Baldwin said this leads to borrowers owing lenders more than they originally borrowed. \n“With the decline in the housing market, prices of homes have dropped, and it all snowballs,” Baldwin said. “When you have a high foreclosure rate in a community it brings down the value of other homes.” \nBlomquist said the foreclosure rate is likely to continue to increase into the next year.\n“A lot of the mortgages susceptible to foreclosures are resetting to higher interest rates through 2008, so that sets the stage for foreclosures to increase,” Blomquist said. \nKim Beatty, a client relations representative for W R Clouse & Associates Mortgage Company, said the most important thing right now is to educate clients so they understand the terms of their loans. \n“It’s important to get with someone you trust,” Beatty said. “Someone who is working for you and not their bottom line.”\nGov. Mitch Daniels’ administration has taken action to improve the financial education of Indiana residents. Baldwin said Daniels has ordered schools to provide financial education as early as elementary school. Baldwin said consumers will better understand credit and how to use their money through such programs.\nBaldwin encourages anyone who is in mortgage trouble to get in touch with the Indiana mortgage and foreclosure help line, the free service is set up to help people stuck in a bad loan, or in need of financial advice.