Predatory Lending in Jefferson County
Jefferson County was established in 1819 and is located in the central northern part of the State. The county lies on the iron, coal and limestone belt of the South, and is one of the reasons Birmingham was named as such, after its England counterpart which was the centre of the UK iron and coal trade in Warwickshire.
Predatory lending has been a big issue across Jefferson County, and in particular Birmingham. The mortgage lenders targeted vulnerable people into purchasing low cost mortgages with small print stating that their premiums would rise dramatically after a fixed period. In some cases, these repayment rises were as much as 40-50% a month after the first twelve months of ‘honeymoon’. These repayment hikes have proved too much for many residents of the Birmingham-Hoover Metropolitan area and foreclosures are on the rise again, up 15% on the previous month, and up 233% on the same month last year.
Birmingham City Council has launched a law suit against a string of law firms who were party to predatory lending policies, preying on the often poor, uneducated and vulnerable people who have now had their homes repossessed.
The economic climate is grim across the county at the moment and Alabama’s three largest auto manufacturers, Honda, Hyundai and Mercedes have all recently announced massive sales declines. With company profits falling, employees are being made redundant inevitably and the county job loss rate is at its highest for four years, up to 5.6%. In October 2007, the rate was 3.7%, and experts predict that it has not yet peaked.
The good news is that this unemployment figure is significantly less than the national average which sits uncomfortably at 6.5%, however, that is little consolation to those who find themselves out of work and struggling to meet rising repayments on their sub-prime mortgages.
If the figure across the State is 5.6%, then at least the Jefferson County figure is slightly below the State average at a steady 5.2%, but that is a lot higher than the lowest rate in the State in Shelby County, whose rate is still only 3.5%. The movement in the employment market is actually forcing people to look further afield for jobs, but now is not a good time to move house.
If residents in Jefferson County are not in negative equity, then they are still going to end up selling at up to 30% less than they could have sold for two months ago; this is daunting news if you have to move to find work. Due to the high number of construction projects in the area and also the increasing number of foreclosure properties on the market, one might be mistaken for thinking it would be easy to pick up a bargain – but you would be wrong. Banks are so cautious at present that buyers are being asked for much higher deposits and with the levels of uncertainty at a record high, who knows how low the market will go?