Foreclosures remain high

LAWRENCEVILLE - Nationally, fewer people defaulted on their home mortgage during the first three months of this year, but one of Georgia's top bankers expects metro Atlanta's foreclosure rates will likely remain higher than normal in 2006.

Robert Braswell, commissioner of the Georgia Department of Banking and Finance, said several reasons lie behind the trend:

•Steeper payments - Many metro Atlanta hombuyers took out interest-only, variable rate loans over the past two or three years to purchase a larger house, but interest rates have steadily risen over that time. Many home buyers stretched to buy their house, but now they can't keep up with the increasing size of their mortgage payments.

•Competition - Metro Atlanta is an extremely competitive market in which mortgage lenders have loosened their underwriting standard to qualify a consumer for a particular size or type loan.

•Layoffs - Recent job losses or pay cuts will affect many homeowners.

•Fraud - Although the state is making significant strides combating mortgage fraud, a significant amount still exists in the metro area. It's difficult to determine the amount of foreclosures or delinquencies caused by mortgage fraud, but it definitely contributes.

Gwinnett saw 536 foreclosures in May, a 20 percent increase from the same month a year ago, according to the real estate services firm Equisystems.

Earlier this week, the Mortgage Bankers Association said the percentage of loans in the foreclosure process was .98 percent at the end of the first quarter, a drop of 1 basis point from the final three months of last year.

Compared with the first quarter of 2005, the percentage was down 10 basis points.