In North County Few Brokers are Responsible for the Many Foreclosures

The brokers are tiny in numbers but they have caused jumbo sized foreclosures in North County. Real estate brokers numbering 21 had huge numbers of foreclosures attached to their names. It raises the question as to how such a few could create such havoc? Hundreds of families are in trouble and lenders have suffered millions in dollars.

Across the country such types of brokers and lenders have created a crisis of global proportions. Today USA is passing through the worst recession in recent history. Congress has allocated $700 billion from taxpayer’s kitty to save the situation. This gigantic catastrophe could not possible have been caused by any one offender. There are multiple reasons.

In North County however the culprits are a handful of mischief-makers. The North County Times investigation team has pried into thousands of records and interviewed buyers. A pattern has been revealed that some of these brokers focused mainly on the Latinos who could not qualify for traditional prime loans to buy reo houses. The brokers pushed the Hispanics into these mortgages that had initial low interest-only payment schedules and sometimes no down payments. With time when the monthly instalment began to jump the borrowers helplessly fell into foreclosures.

About 6% of 59,000 units in North County were foreclosed and sold during the period stretching from 1st January 2003 to 31st December 2009. On an average 2% to 4% of the houses bought by borrowers reverted back to the lender.

The NCT report however concluded that 21 brokers were responsible for 25% to 60% for the foreclosures. The number could be much higher because many are defaulting but have not yet slipped into foreclosure. The records of all the brokers show that they have specialized in finding out Latino buyers with low income and credit ratings, and most the loans were sub-primes. These brokers together account for nearly 2% of the sales activity in this county since 1st January 2006. From 2007 when the foreclosure crisis began to dominate the scene they were responsible for 455 foreclosed postings that calculated for 11% of all the foreclosures included in the investigation.

Industry pundits opine that is not possible for such high rates of soured loans could be the result of ordinary mortgage deals. Some agents working in a real estate firm have been indicted for fraud. They admitted their guilt.