Ohio No.1 in Mortgage Foreclosures

Ohio is mired in bad statistics these days. One of those is that Ohioans lead the nation in losing their homes. Today the Urbana Citizen has an AP article that says:

An increasing number of Ohioans who live in small towns and rural areas are losing their homes because of risky, high-interest mortgage loans, records show.

Sub-prime loans, which generally carry interest rates above 8 percent, are designed for people who can't qualify for traditional mortgages because of poor credit, low income or the lack of a down payment.

According to a special series in the Columbus Dispatch on mortgage foreclosures in Ohio,

Ohio leads the nation in home foreclosure, a problem fueled by a weak economy, aggressive mortgage brokers, financial overreaching and tepid state oversight.

The statewide increase in foreclosures over the period 1999-2004 was 89%, with several counties seeing foreclosure rates go up by over 150%.

Here is the chart worth a thousand words.

What are the potential implications? According to the article "A Bane Amid the Housing Boom" in the Washington Post,

Should the nation's housing bubbles deflate, as many economists and federal officials expect, the foreclosures could prefigure a national crisis. Americans now shoulder record levels of housing debt -- more than 8 percent of homeowners spend at least half their income on their mortgage.

"We are clearly seeing a spike in foreclosures in a number of our major urban areas," said Julie L. Williams, acting U.S. comptroller of the currency, whose agency regulates the nation's banks. "It can lead to a downward spiral for neighborhoods. If we are not careful, the American dream can quickly turn into the American nightmare."

A recent study in Chicago found that rising foreclosures, and attendant social dislocation, fuel increases in crime rates.