High Foreclosure Rates in South Carolina
According to The State, South Carolina homeowners are losing their homes at a higher rate than homeowners in other states. From 2002 to 2006, the percentage of foreclosures and late loan payments in South Carolina has been much higher than other states, according to Mike Fratantoni, an economist for the Mortgage Bankers Association, which is a Washington D.C. organization that represents more than 3,000 U.S. lenders.
One of the reasons, aside from unemployment, reckless spending and major life events such as divorce and illness, is high-interest mortgage loans. The number of sub-prime loans began rising exponentially in 2003. According to data from the Mortgage Bankers Association, the foreclosure rate was 1.6 percent in on June 30, 2006, as compared to the national rate of 1 percent. The difference between South Carolina and the nation's average is 3,400 homes. Moreover, the percentage of high-interest home loans to South Carolina borrowers with poor credit rose from 8 percent in 2003 to more than 11 percent in June 2006. In addition, sub-prime adjustable rate mortgage loans rose from 1.8 percent in 2003 to an astounding 4.9 percent in June 2006. U.S. homeowners owe about $400 billion on adjustable rate mortgage loans.
From January through August, 2006, jobless rates were 6.5 percent in South Carolina, as compared to 4.7 percent for the nation, the widest gap in those months since 1976. Furthermore, South Carolina production worker incomes have barely kept up with inflation, as compared to workers in other states.
According to the article, South Carolina has not chosen to set limits on mortgage loans rates and fees, and was one of 14 states that opted out of the deregulatory legislation passed by Congress in the 1980s.