The foreclosure crisis is deepening as home prices continue their journey southwards. They have fallen by a huge 14.1% in the first quarter of this year, according to data released Tuesday. Although precise data is not available, it is feared that the group hit hardest by the current crisis is the US serviceman.Foreclosures in towns where US soldiers live are increasing at a pace almost four times the national average. The biggest increase is reported from Columbia, South Carolina, where the army trains recruits for duty in Afghanistan and Iraq at its Fort Jackson facility.
The main reason for this is low salaries, which for recruits with about four years experience, even after adding allowances, falls well short of the median household income of $59,224 in 2007. Unfortunately it was this group which was targeted aggressively by lenders during the housing boom with Adjustable Rat Mortgages, offering attractive initial rates of interest. Now as rates reset at much higher levels, these soldiers are unable to pay, and thanks to the slide in home prices,they are also unable to sell it at a price which covers their outstanding loans. Although the law protects members of the armed forces from foreclosure while on active duty, the protection is available only for 90 days after they return home. Often when a soldier returns after being discharged due to stress or injury his chances of finding new employment may be compromised. The current economic downturn has only made matters worse.
New legislation is proposed to raise the refinancing limit for a VA guaranteed home loan, and also to prohibit lenders from foreclosing on servicemen for a year after their return from active duty.
Says a veteran,' It's heartbreaking to see people struggling with a foreclosure while they or someone they love is in a war zone, or when they're trying to adjust after coming back from one.'