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Rising foreclosures cast costly shadow APTNAugust 8 2007: By Warren Levinson, The Associated Press NEW YORK - As the nation's housing market continues to struggle, spiraling foreclosures are shaking not only homeowners and realtors, but also lenders and investors on Wall Street. (July 25) It is a perfect storm for homeowners and housing investors in neighborhoods like Capitol View in southwest Atlanta. Rising interest rates, falling home prices and loans to buyers with less than perfect credit have led to an explosion in mortgage foreclosures. The story is the same elsewhere. Bob Moulton, a leading New York mortgage broker, says the foreclosure problem is not limited to the so-called subprime sector. BOB MOULTON, president, Americana Mortgage Group: "It's a trickle-up phenomenon. Spiraling foreclosures are now shaking the nation's financial markets." WARREN LEVINSON, The Associated Press: "Wall Street is taking notice. Just a couple of days after the Dow Jones Industrial Average hit 14-thousand for the first time, worries about mortgage foreclosures help drag stock prices down more than a percent and a half. And the bad news kept coming. On Wednesday came reports that sales of existing homes dropped in June to their lowest level in four years. And mortgage applications are at a five-month low." BOB MOULTON: "It's going to get worse before it gets better. Lot of news out there, people shifting money to make mortgage payments. Don't know how long they can keep it up." Back in Capitol View, realtor Chris Ballard is seeking to stem the tide. He's been trying to persuade lenders that reducing mortgage payments can be a better deal than foreclosure. CHRIS BALLARD, realtor: "The cost the lender incurs on a foreclosure is anywhere between 20 to 40 percent of the value of that home between legal fees, late fees and payments. If they forgive part of the debt, they are actually coming out ahead financially." After all, foreclosing often leaves a lender with a portfolio of unsellable houses.
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