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Foreclosure Rates Reflect Human Cost of Mortgage Meltdown

The city of Baltimore has lately seen skyrocketing foreclosure rates and slumping home prices. The housing shake-up led the city to sue its largest lender -- Wells Fargo -- over allegations that it gave black homebuyers higher loan rates than white buyers. Ray Suarez examines the impact of the housing crisis in Baltimore.

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  • RAY SUAREZ:

    Now, a two-part look at the growing fallout from the troubled housing market. We begin with a report on the rising rates of foreclosure and the consequences as seen in one particularly hard-hit city, Baltimore.

    As hundreds of thousands of American families lose their homes, the courthouse steps is the last stop.

  • AUCTIONEER:

    Anybody want to bid on this property?

  • RAY SUAREZ:

    The end of a road, a public auction of mostly foreclosed properties. It’s an open-air auction, bidders often representing buyers on the other end of the cell phone. This sale put houses from Baltimore City and the surrounding county on the auction block.

    The city of Baltimore has seen a skyrocketing foreclosure rate. According to RealtyTrac, foreclosures in the Baltimore area increased 544 percent between 2006 and 2007.

    Slumping home values continue to put more mortgages in trouble, stripping out precious equity and putting homeowners closer to the edge. Rising unemployment and tighter credit makes it harder for a homeowner in trouble to sell.

  • AUCTIONEER:

    The third and final call. Sold, $200,700.

  • RAY SUAREZ:

    Laurence Whitter is a small investor who frequents property auctions like this one. He’s not buying a place to live in. This will be an investment.

  • LAURENCE WHITTER:

    A lot of guys here that are fairly sophisticated long-term investors and usually people who are fairly decently bankrolled.

  • RAY SUAREZ:

    Plenty of properties headed for the auctioneer’s gavel are here around Baltimore’s Reservoir Hill neighborhood. The mortgage meltdown has moved it from gentrification to a foreclosure hotspot.

  • MAYOR SHEILA DIXON (D), Baltimore:

    You have to look at the whole area in perspective.

  • RAY SUAREZ:

    Mayor Sheila Dixon insists it’s not just the downturn in the market or bad times locally or nationally in housing that’s pulling Reservoir Hill down.

  • MAYOR SHEILA DIXON:

    I mean, this was a very thriving community at one point in time. It went down. People realized the wealth and the type of properties of these brownstone houses and the value that it had. People began to do individual renovations, as well as some collective efforts.

  • RAY SUAREZ:

    But as the housing market has gotten worse, things changed.

  • MAYOR SHEILA DIXON:

    What we’ve found is that, you know, people make an investment to buy, can’t maintain based on the types of loans and mortgages that they get, and that this is clearly a foreclosure area.

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