During the first quarter, Indianapolis ranked as the metropolitan area with the highest foreclosure rate. And the chief of the firm reporting the data has a frank warning about borrowers with nontraditional loans.
One in every 69 Indianapolis-area households was in foreclosure during the 90-day period, according to RealtyTrac's 2006 U.S. Metropolitan Foreclosure Market Report. With 1.45% of households in foreclosure, the Indiana hub's rate was slightly higher than No. 2 Atlanta's 1.42% rate.
"Indianapolis narrowly edged out Atlanta as the city with the highest foreclosure rate in Q1," said CEO James J. Saccacio in the statement. "Unemployment is a major reason why homeowners stop making mortgage payments, and slow home price appreciation can make it harder for homeowners in default to refinance or sell to stop foreclosure."
Next was Dallas, with a 1.01% rate, followed by Memphis, Tenn., at 0.99%, then Denver, at 0.95%, according to the report, which covered the 100 largest metropolitan statistical areas.
Boston and New Orleans had some of the lowest foreclosure rates, RealtyTrac said, noting many Gulf-area defaulted mortgages are not entering foreclosure because of an extended HUD moratorium.
The Irvine, Calif.-based company said its report includes properties in pre-foreclosure, properties in foreclosure and lender-owned properties.
"Because of the high home prices in many areas, more home buyers have stretched themselves financially with creative, and often risky financing that involves adjustable interest rates, interest only and negative amortization loans," Saccacio added. "Home buyers with these types of loans are more susceptible to default and foreclosure when interest rates move higher."