Iowa Ranks 4th in Nation in Subprime Foreclosures, 9th in Overall Foreclosures

According to a report by the Mortgage Bankers Association, Iowa ranks fourth in the nation in subprime foreclosure rate, with a rate of 8.63% (of Iowa loans).  Iowa ranks ninth in total foreclosure rate with 1.65% (of Iowa loans).  In an article on ABC's Ottumwa affiliate website the president of the Iowa Bankers Mortgage Corporation said that most of these subprime loans were given out by brokers and national institutions. 

In response to this growing problem, Attorney General Tom Miller announced an ititiative to assist borrowers facing foreclosure and to encourage loan modification between lender and borrower.  The project will feature a Foreclosure Hotline borrowers can call for assitance.  Miller stated that 50% of people foreclosed upon never contact their lender to attempt to avoid foreclosure.  It is his hope that this initiative will increase communication between lenders and borrowers and decrease the rate of foreclosures by guiding borrowers through the maze that can be created when the originating party transfers the loan to another party, who may then sell the loan further down the line or have another company service the loan. 

This effort meshes very well with the guidance issued by the federal regulators (discussed here).  The Attorney General and the regulators seem to understand that it is not community banks causing this problem, but brokers and other less regulated entities.  Hopefully, Congress will see this as well.