Friday, December 14, 2007

Foreclosures strike rural areas, but the numbers are far lower than in urban areas

Around the country, foreclosures have shaken up housing markets. Rural areas have not been free from loan defaults, but the number of foreclosures have been far fewer than what has happened in urban areas. That's because rural borrowers and lenders work a little differently, reports the Pittsburgh Post-Gazette.

Rural borrowers tend to be far more conservative in the amount of debt they carry, and the lenders who serve rural areas keep those loans on their books instead of selling off to others, reports Tim Grant. In addition, the U.S. Department of Agriculture handles the majority of rural home loans, and it tries to avoid foreclosures by suspending monthly payments for up to two years. Last year, less then 3 percent of the USDA-funded mortgages in Pennsylvania were foreclosed.

"Usually in small towns people know each other, and you might have help from relatives. Plus you have the stigma of not wanting people to know you've lost your home," Darla Wise, north central chapter leader for the Pennsylvania Mortgage Brokers Association, told Grant. "In a city, you can get away with being foreclosed on and people not know. That might be a reason why rural foreclosures might not be as high. Also, in small towns, people are more inclined to help out their neighbors."
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