Plano Star-courier > News
Foreclosures put stranglehold on mortgage market
By Josh Hixson, Staff Writer
Increasing home foreclosures have tightened the mortgage market making it hard for first time homebuyers to take their first plunge into the Collin County housing market.
“It is going to make it harder for first time home buyers just because it is going to be more difficult to get a loan,” said Terrie Monroe, Plano’s community development coordinator. “In the long run this is the best thing.”
Home foreclosures in Collin County increased 40 percent from April 2006 to April of this year, according to the city of Plano neighborhood services division. There were 1,366 foreclosures in the county this August, Monroe said.
What makes a tighter mortgage market a healthier market?
“If the lenders are tighter with their qualifications then people who are really not ready to buy yet are not going to be able to buy homes,” Monroe said.
The rise in foreclosures can be directly linked to subprime mortgages, Monroe said.
Mortgage brokers used subprime mortgages that promised low initial payments to lure first time home buyers with poor credit and inconsistent income. After two or three years the payments rose sharply making it hard for borrowers to make ends meet and widespread home foreclosures followed.
“I have seen it just within the last week or so,” said Kimberly Williams, a housing counselor, with Consumer Credit Counseling of North Central Texas. “First time homebuyers looking to close on their paperwork pulled back from closing because they couldn’t get the lending. It is going to be really hard at this time because lending companies are filing bankruptcy.”
Both Williams and Monroe said they have been counseling home buyers with poor credit who still want to purchase a home to consider applying for a Federal Housing Administration loan.
“FHA loans are the best for low income families. They want you to get counseling, which to me is an awesome thing,” Williams said. “The main thing is we would like to educate (first time homebuyers) on purchasing a home. A lot of people are just so excited about getting a home, they want a home so bad, that they are not looking at next week or next year. They are looking at today.”
For those with low-to-moderate income who qualify, Plano also offers a first time homebuyers program that provides financial assistance to help with the down payments and closing costs of purchasing a home.
Monroe said through the program they educate residents to pull their credit report before applying for a loan and track their monthly savings and expenditures.
“We talk about foreclosure as a possibility and we tell them to take action as soon as possible if they experience problems in making their payments,” Monroe said. “We have less than a 3% foreclosure rate on our first time homebuyer program.”
J.C. Mier, a senior mortgage banker with Texas Lending.com, said the market will eventually repair itself.
“The mortgage industry is cyclical just like the stock market,” Mier said. “We are in a down cycle right now, but they will eventually bounce back up.”
Contact Josh Hixson at jhixson@acnpapers.com
“It is going to make it harder for first time home buyers just because it is going to be more difficult to get a loan,” said Terrie Monroe, Plano’s community development coordinator. “In the long run this is the best thing.”
Home foreclosures in Collin County increased 40 percent from April 2006 to April of this year, according to the city of Plano neighborhood services division. There were 1,366 foreclosures in the county this August, Monroe said.
What makes a tighter mortgage market a healthier market?
“If the lenders are tighter with their qualifications then people who are really not ready to buy yet are not going to be able to buy homes,” Monroe said.
The rise in foreclosures can be directly linked to subprime mortgages, Monroe said.
Mortgage brokers used subprime mortgages that promised low initial payments to lure first time home buyers with poor credit and inconsistent income. After two or three years the payments rose sharply making it hard for borrowers to make ends meet and widespread home foreclosures followed.
“I have seen it just within the last week or so,” said Kimberly Williams, a housing counselor, with Consumer Credit Counseling of North Central Texas. “First time homebuyers looking to close on their paperwork pulled back from closing because they couldn’t get the lending. It is going to be really hard at this time because lending companies are filing bankruptcy.”
Both Williams and Monroe said they have been counseling home buyers with poor credit who still want to purchase a home to consider applying for a Federal Housing Administration loan.
“FHA loans are the best for low income families. They want you to get counseling, which to me is an awesome thing,” Williams said. “The main thing is we would like to educate (first time homebuyers) on purchasing a home. A lot of people are just so excited about getting a home, they want a home so bad, that they are not looking at next week or next year. They are looking at today.”
For those with low-to-moderate income who qualify, Plano also offers a first time homebuyers program that provides financial assistance to help with the down payments and closing costs of purchasing a home.
Monroe said through the program they educate residents to pull their credit report before applying for a loan and track their monthly savings and expenditures.
“We talk about foreclosure as a possibility and we tell them to take action as soon as possible if they experience problems in making their payments,” Monroe said. “We have less than a 3% foreclosure rate on our first time homebuyer program.”
J.C. Mier, a senior mortgage banker with Texas Lending.com, said the market will eventually repair itself.
“The mortgage industry is cyclical just like the stock market,” Mier said. “We are in a down cycle right now, but they will eventually bounce back up.”
Contact Josh Hixson at jhixson@acnpapers.com
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