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It is becoming apparent that many South Florida homeowners are on a track
that ends in foreclosure. According to the Palm Beach Post, using data
collected by a Florida firm that compiles foreclosure records, slightly over $68
million in home mortgages were defaulted by Florida residents in the first
quarter of 2005, which correlates into over 2,000 families possibly losing their
homes to the bank.
Many are blaming the trend on exotic loans and mortgages, not to mention lax
regulation by the State of Florida. Considering how hot of a housing
market Florida is - and the potential of it being exploited - too much risk has
been allowed by state lawmakers. In 2005 alone, thousands of more brokers
licenses were handed out in Florida, as well as more availability of new
"exotic" loans that let middle-income families obtain mortgages on homes costing
over $500,000.
With newer adjustable-rate mortgages - commonly called option ARMs - loan
holders are starting off with a low interest rate, but are not protected from
that rate rising, which is now the case. Some loans, called interest-only
loans, allow borrowers to just pay off the interest fees accrued from the loan
in the early stages, enabling families to financially set themselves back even
further when the terms of the loan inevitably change.
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