2011 could prove to be a frightening year for homeowners who purchased their homes with the help of an option arm loan.
The city attorney for Harlingen has recognized the possibility that residents in her city could potentially be affected this year by those loans based off of city records.
“In the city of Harlingen we actually had our highest number of building permits in 2005-2006." said Harlingen City Attorney Roxann Cotroneo.
During those years the economy was doing pretty well, so people were taking advantage and building new homes.
The popular loan at that time was the option arm loan, a loan that allowed a new homeowner to pay a very small mortgage payment with the agreement that the payment would drastically increase five years later.
Well, here we are in 2011, the year those option arm loans are set to skyrocket.
Cotroneo says the city has no way of knowing which homeowners, who built in Harlingen back in 2005-2006 have those option arm loans, but she's working to get the word out to all 850 homeowners who built during that time to check in on their mortgage loans.
Come April 1st her office, and partner Consumer Credit Counseling Services, will send out information to let people know what they can do if they're at risk for foreclosure and how to prevent becoming a victim of a foreclosure scam.
As it is, the foreclosure rate in Harlingen is leaning towards the high end, comparatively speaking.
"In the first six weeks for the year of 2011 we have 69 homes that were foreclosed on and for sale." said Cotroneo.
That number, which represent only 6 weeks, is about twenty foreclosures less than the entire year of 2010, something Cotroneo says is alarming considering most homeowners haven't even begun to really see the effects of these option arm loans yet.
She feels more foreclosures are on the way unless people with these loans take action before it's too late.
While a foreclosure lowers the property value of the home being taken over, it also lowers the value of the surrounding properties which affects the city as a whole.
"Lower property values will cause less property taxes to be collected by our city which means less city services available and can result in poor quality of service , so anything a city can do to actually prevent a foreclosure and vacant structures is extremely important to keep a viable and health community."
For more information on how to avoid foreclosure, click on the link below: