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Record number of property foreclosures in 2007

Consumer loan defaults cause rapid increase

April 16th, 2008 issue

(Updated April 17, 2008) Courts ordered more than 400,000 property foreclosures in 2007 – the largest number ever, Mladá fronta Dnes reported on Friday.

Defaults on consumer loans were the main cause of such foreclosures. Such consumer loans of up to 50,00 Kč ($3,140) are meant for customers looking to make big purchases of things like furniture and TVs.

The number of foreclosures was 40 percent higher than it was in 2006. Banks often sell such properties at auction if customers cannot pay their debts.

A similar situation exists in Western Europe and the United States, where defaults on subprime mortgages, are now causing economic problems throughout the world. Such subprime mortgages are commonly made to more risky customers who are considered by banks as less likely to be able to pay off their debts.


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