 
Genesyxx
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Username: Genesyxx
Post Number: 661
Registered: 02-2004
| | Posted on Thursday, January 25, 2007 - 1:35 pm: |    |
FORECLOSED
Record number of region's homeowners are in trouble as economy flounders
Home foreclosure filings surged to record levels across metro Detroit in 2006, adding to the misery of a region already suffering the effects of a sagging job market, plant closures and layoffs.
RealtyTrac Vice President Rick Sharga, whose company follows foreclosure rates nationwide, called it "the perfect storm" for Michigan -- a situation in which slow housing sales, loss of income and increasing monthly payments are bringing the house down on homeowners.
The figures, which RealtyTrac will release in a report today, are staggering:
• In Macomb County, the number of foreclosure filings nearly tripled, from 2,755 in 2005 to 8,192 last year, translating to one home for every 39 in the county.
• In Oakland County, Michigan's wealthiest county, the number jumped from 3,754 in 2005 to 7,282, meaning one of every 68 homes.
• In Wayne County, the number of filings more than doubled, from 18,176 to 40,220, translating to one of every 21 homes. That, RealtyTrac said, is higher than any county in any of the nation's largest metropolitan areas.
"It's the repercussions of a bad economy -- and in stark contrast to other parts of the country that are growing," said Dana Johnson, chief economist for Comerica Bank in Ann Arbor. "It's unfortunate, but it's not surprising."
The foreclosure data is just one indicator of the economic stress battering Michigan as manufacturers downsize and the job market fails to recover. The state's 7.1% unemployment rate last month was the second highest in the nation, after Mississippi.
The National Association of Realtors said last year that metro Detroit had suffered the sharpest decline in home values of any large urban market in the nation. In December, a survey by the Washington, D.C.-based Mortgage Bankers Association showed that in the third quarter, Michigan ranked third behind Mississippi and Louisiana in mortgage delinquency rates.
RealtyTrac noted that nationwide, foreclosure filings were up -- by 42% -- but that increase was dwarfed by the Michigan numbers, which showed 127% more filings in 2006 than in 2005.
"It's a sad state right now," said Chris Cotzias, a real estate broker for Re/Max in the Grosse Pointes.
Trend predicted to worsen
There are several kinds of foreclosures. Most are initiated by a mortgage lender for failing to keep current on payments. Others occur because homebuyers fail to make good on property taxes.
Philip Bozenski, broker of the Allen Park-based Bozenski Real Estate & Appraisals, said he noticed the number of foreclosures beginning to increase six years ago, as the state's economy started to slide. Now, he said, it seems everyone in metro Detroit knows someone who is losing their house or is in the foreclosure redemption period and trying to save it.
"It's only getting worse," he said, predicting the trend will continue.
Wayne County Chief Deputy Treasurer Terrance Keith noted that during a three-day period last week, 457 people applied for the county's hardship exemption to delay the deadline to pay their taxes. In 2006, more than 1,100 applied for the hardship exemption.
"That would suggest that the economic concerns that we thought about and have been watching these last 18 months are on target, that they are as dire as we believe them to be," he said. "And it would suggest that it will likely continue for next year."
The treasurer's office is preparing an outreach campaign to inform county residents about its hardship programs, Keith said. Cable TV advertisements were scheduled to begin Wednesday, and network television, radio and print ads are planned, too.
Moreover, county officials have raised the income eligibility threshold to qualify for the program from below the poverty level to 25% above it.
Concerns about tax revenue
Macomb County officials were unavailable to comment Wednesday, but, in Oakland County, officials worried that if the number of foreclosures continues to rise precipitously, it could hurt county revenues -- and, by extension, services.
"Long term, it's dangerous to the amount of revenue counties, cities and townships can get from property tax values," said Oakland County Deputy Executive Robert Daddow. He predicted that if the trend continues, property tax revenues could start to decline as early as 2011.
Oakland County officials put the number of foreclosures last year at 5,321 -- lower than RealtyTrac. But that is because the company, based in Irvine, Calif., counts all foreclosure filings, whether the house is eventually put up for auction or not. In some cases, the lender or government attempting to foreclose reaches an agreement with the buyer to allow him or her to keep the house.
Oakland County's number still translates into an average of more than 100 homes per week going to auction, the largest number county officials ever have seen and more than twice the number in 2004.
"There are a lot of different variables why," said Oakland County Sheriff's Capt. Mike Johnson, who oversees the division responsible for handling foreclosures. "But I think a lot of these short-term mortgages -- the adjustable rate mortgages -- are blindsiding folks."
In some cases, Johnson said, owners simply walk away from homes after overextending themselves. "This isn't the orphan and widow being shoved out in the cold," he said.
Dave Trott, managing partner of Trott & Trott, a Bingham Farms-based law firm that represents banks in foreclosure proceedings, said his clients often take huge losses on foreclosures and don't begin proceedings until a loan holder is three to five months behind on payments.
Trott estimates that half of the homeowners who enter foreclosure get out of it by negotiating with their lender.
He added: "I've never had a client that wanted to foreclose." |