In the suburbs of Dallas, Bridget Edwards comes home to uncertainty every day. She and her husband, James, are four months behind on their mortgage.
“It's been just like a roller coaster,” Bridget says. “Our payments have been just up and down.”
Up and down, from $1,300 a month to more than $2,000.
“We have an adjustable-rate mortgage,” she explains. “I really didn't know it would change like this.”
Today, foreclosure looms over their $129,000 home. That’s a problem facing a growing number of Americans, who are finding themselves one crisis away from financial ruin. RealtyTrac, an industry organization that maintains a nationwide database of foreclosures, says mortgage defaults between January and March of this year numbered 323,102 compared with 188,122 during the same period last year — an increase of 72 percent.
Indianapolis leads the nation, with one out of every 69 homes in foreclosure. Atlanta follows closely at 1 in 70 homes. Then Dallas — where the Edwardses live — at 1 in 99. Memphis is fourth at 1 in 101. Denver rounds out the top five at 1 in 105.
Experts say it's those popular variable-rate loans that are helping drive the surge in foreclosures around the country, allowing buyers to purchase more expensive houses than they could otherwise afford.
With adjustable-rate loans accounting for about a quarter of all mortgages, how big could this problem become?
“If the economy stays healthy and creates jobs, you may see these foreclosure rates actually go down in some of these cities,” says David Lereah, chief economist at the National Association of Realtors.
Meantime, foreclosure auctions are filling up, with houses too pricey for many to keep.
“The reason homeowners have been buying properties that are probably beyond their means, is that they haven't been looking at what the house costs,” says Rick Sharga with RealtyTrac, which maintains a database of foreclosed properties. “They've been looking at what the monthly payment was.”
That’s something the Edwardses admit — and now regret.
“I am sad. I'm angry. I'm confused,” says Bridget Edwards.
“I love this house,” James Edwards says.
They are hoping the ultimate cost isn't their pride and joy.