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In response to the soaring number of foreclosures, Lt. Gov. John Carney is asking for nearly $1 million to boost some of the state’s assistance programs.
Through the second quarter of this year, there were 2,500 foreclosures in Delaware, quickly beating the state’s yearly average of 2,000. In response to the crisis, Carney in October formed a foreclosure task force.
The group has issued an interim report calling for more funding for state programs that assist people at or near foreclosure. The high number of subprime mortgages issued during the real estate boom, especially in the last three years, is a factor that contributes heavily to the rate of foreclosure, the task force found.
Carney’s task force identified short-term goals to increase money available to mortgage holders in trouble and to raise public awareness of available state resources.
The Delaware Emergency Mortgage Assistance Program (DEMAP) helps people who meet certain qualifications by providing them with small loans at a fixed rate of 3 percent. However, these loans do not exceed $15,000.
Carney’s group is calling for an additional $720,000 for the program to see it through the last half of 2008. The state has no foreclosure counselors, and housing counselors are already overwhelmed as the number of foreclosures continues to swell. The task force recommends hiring seven more counselors, at a cost of $232,000.
Because people may not know what resources the state has available, the team suggested a marketing campaign to highlight places homeowners can turn to, hoping that people will seek assistance to avoid foreclosure.
When a borrower is in default of a mortgage, the property goes back to the entity that offered the loan. Before a loan is foreclosed, it must be labeled seriously delinquent, meaning that a payment has not been made on it for 90 days. From 2006-2007 the number of seriously delinquent loans in Delaware jumped 57 percent according to the task force’s report.
Sub-prime mortgages are loans with rates higher than the prime rates charged to the most credit-worthy borrowers. People who receive them usually have poor credit so they don’t qualify for the prime rate. Because sub-prime loans involve the lender having more money invested than it would in a traditional loan, fees and charges also are often higher.
The task force comprises 16 administrators, lawmakers, Realtors, bankers and others involved in the housing market.
The group said it will continue to meet and monitor foreclosures to see that its efforts are successful and to adjust them where needed.
The task force was charged with finding long- and short-term solutions and ways to prevent foreclosures, focusing on education and financial assistance. The interim report was issued Dec. 20 in Wilmington.
Contact Leah Hoenen at leah@capegazette.com
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