Area foreclosures increasing, not at national rates

The number of Americans losing their homes because of an inability to pay continues to grow nationally.

“Foreclosures have become more frequent here, but nothing like other places in the nation,” said Brian Monge, an agent with Jim Maloof Realtor.

The good news is that the problem hasn’t hit central Illinois as badly as it has other parts of the country.

But it’s still a problem that’s plaguing the American economy. More than 80,000 U.S. families lost their homes in April, according to Hope Now, an alliance of mortgage lenders, investors and community advocacy groups. That’s up from 72,000 who lost homes in March, the group stated.

Among the headlines: The nation’s foreclosure rate doubled in 2007; U.S. home values dropped by more than 7 percent last year as new-home sales hit a 25-year low.

The rash of foreclosures serves as a sobering reminder of the subprime loan crisis that’s been making so much economic noise.

The nation’s foreclosure problem is not equally distributed, said Paul Lueken, president of Lombard-based Illinois Association of Mortgage Professionals.

“Four states – Florida, Arizona, Nevada and California – experienced too much home appreciation while three others – Indiana, Ohio and Michigan – are suffering from recession. Those states skew the national foreclosure figures,” he said.

In the Peoria market, foreclosures have been on the rise but still represent a very small percentage of homes – just more than one-half of 1 percent, said Brad Horton, recorder of deeds for Peoria County.

A tightening housing market has aggravated the problem for those who face defaults on house payments, he said. “In the past, people would sell their home to get out from under a loan. But when you can’t sell your house, homeowners get in trouble,” said Lueken.

There were 501 foreclosures recorded in Peoria County in 2007, up from 436 in 2006 and 370 in 2005. So far this year, there have been 203 foreclosures in the county, compared with 172 over the same period last year, said Horton.

“We’ve seen a huge jump (in foreclosures) from March to May,” said Flemming, who works to help families in financial crisis. “We try to get people refinanced, to see if their loan is salvageable,” she said.

While Peoria hasn’t seen rampant foreclosures, some in the area have been hit. “We’ve seen foreclosure activity quadruple from last year,” said Shayla Flemming, senior housing counselor for Metec, a faith-based, not-for-profit organization at Mount Zion Baptist Church, 305 Madison Park Terrace.

The foreclosure problem is not confined to any specific part of the Peoria area, said Becky Peterson, president of the Peoria Area Association of Realtors. “They’re everywhere,” she said.

Sometimes foreclosed homes can sit idle for some time, said Peterson. “It’s a process,” she said, referring to the reselling of a home through a lending institution once the previous owners move out.

Peterson estimated it can take three to six months to move a home through foreclosure.

Inland foreclosures rise less than expected

Foreclosure activity continued to climb last month in Riverside and San Bernardino counties, fueled by falling home values and resets of adjustable mortgages to higher interest rates.

The two-county Inland region once again led Southern California in the rate of foreclosure-related filings, including notices of defaults, trustee sales and lender repossessions. Statewide, Riverside County ranked fourth among counties with a filing for every 92 households and San Bernardino County ranked fifth with a filing for every 108 households.

Daren Blomquist, spokesman for Irvine-based RealtyTrac, which on Monday released the March foreclosure data, said the firm had expected an even steeper increase in foreclosures because many mortgages with low introductory interest have been resetting to higher rates.

Riverside County’s foreclosure-related filings last month totaled 7,960, an increase of 30 percent from February and 127 percent from March 2007. San Bernardino County had 6,182 filings, up 25 percent from February and 118 percent from a year earlier.

“We are somewhat surprised there hasn’t been a bigger uptick in foreclosure activity,” Blomquist said.

One reason might be that programs aimed at stemming foreclosures — from increasing the availability of government-sponsored mortgages to lowering interest rates and promoting deals between lenders and strapped borrowers — are helping, he said.

Foreclosure activity is expected to peak later this year based on subprime mortgage resets, said Leslie Appleton-Young, chief economist for the California Association of Realtors.

She said although some homeowners may avert catastrophe with the assistance of various programs, the problem is much too large to disappear.

Another possibility is that the foreclosure workload is overwhelming lenders.

“I have heard anecdotally that some people who have not made (mortgage) payments for quite a few months have not had a notice of default yet,” Blomquist said.

On the positive side, she said in parts of the state, lenders burdened with foreclosed properties have lowered prices on repossessed homes to the point that they are attracting first-time buyers.

RealtyTrac reported that foreclosure filings on 64,711 homes were recorded in California in March, the most for any state for the 15th consecutive month. California’s foreclosure activity last month increased nearly 21 percent from February and almost 106 percent from a year earlier.

Pete Nyiri, owner of Top Producers Realty in Corona, a large marketer of bank-seized homes, said he has seen an increase in sales of homes priced below $300,000

For the fourth consecutive month California ranked second among states in the rate of foreclosure, trailing only Nevada.

One in every 204 California households received a foreclosure-related notice last month, which was 2.6 times the national average. In Nevada one in every 139 households received a foreclosure notice.

9 mortgage lenders agree to compact to slow foreclosures

Nine mortgage lenders who hold about 55 percent of Ohio’s subprime home loans agreed Monday to abide by policies designed to help struggling homeowners avoid foreclosure.

The agreement is a result of months of negotiations between the administration of Gov. Ted Strickland and subprime lenders, who had balked at an initial proposal Strickland offered last fall.

The agreement calls on lenders to make modifications to existing loan agreements when borrowers are unable to make payments. The lenders also agreed to make “good faith attempts” to contact defaulting borrowers as soon as possible.

The agreements are not legally binding. They expire June 30, 2009, a point at which leaders said they expect Ohio to have seen the worst of the foreclosure crisis.

Each company came to a separate agreement with the state based on its own business models and practices. Some made specific promises to contact borrowers a certain time before an adjustable rate mortgage was scheduled to reset to a higher rate, while others did not.

“While there may not be legally enforceable sanctions if these agreements are not lived up to, we believe it is quite significant that they would be willing to put their honor and prestige on the line like that,” Strickland said.

Strickland proposed an agreement in October that was based on recommendations made by a state task force on the mortgage crisis. Lenders did not sign the proposal, saying in some cases that it would have forced them to violate contract laws.

Ohio Department of Commerce Director Kim Zurz said the original compact called for across-the-board rate freezes, something lenders found unacceptable.

Citing a study by the Ohio Supreme Court, Strickland said there were 83,230 new foreclosure filings in 2007 _ a 5 percent increase from the previous year. He praised the Monday agreements as the first of their kind in the country. But the nonbinding nature of the agreements and the differences from company to company made it difficult for state officials to predict how the agreement would change the rate of foreclosures.

“We had tried to push the envelope about as far as we could” as a way to start negotiations,” Zurz said Monday.

During his February State of the State address, Strickland had harsh words for mortgage lenders and said the state would explore ways to increase regulations without the cooperation of the lenders.

Praise offered by Strickland and other leaders for mortgage companies Monday was in stark contrast to public statements they made before an agreement was reached.

“Instead of working with us, the subprime lenders stayed silent,” Strickland said on Feb. 6. “That is unacceptable. Quite frankly, they should be ashamed.”

Officials said three large subprime lenders doing business in Ohio had yet to enter an agreement.

The companies that signed the agreement Monday are: Carrington Mortgage Services, Citi, GMAC RESCAP/Homecomings Financial, HSBC Finance Corp., Ocwen Financial Corp., Option One Mortgage, Saxon Mortgage Services, Select Portfolio Serving and Litton Loan Servicing.

In the overall principles guiding the compacts, there is no set definition of what constitutes a “substantial” loan modification. And while the majority of the nine lenders said in their agreements how much notice they would give borrowers before a rate reset, some _ such as HSBC and Carrington _ do not have clear guidelines.

In his original compact proposal, Strickland asked companies to give six months’ notice before an adjustable rate mortgage was to reset.

He said reporting requirements _ in which companies would have to show how many loan modifications they offer, how many were accepted, and how many foreclosure proceedings were initiated _ were a large step forward because they did not exist before.

“We do believe this will work to meet our overarching goal, which is keeping more Ohioans in their homes,” said Strickland spokesman Keith Dailey.

But does it prevent foreclosures or bail out lenders?

With the foreclosure crisis reaching unprecedented levels, Senate Republican Minority Leader Mitch McConnell and Senate Majority Leader Harry Reid have reached an agreement to craft a bi-partisan housing bill aimed at helping families facing the loss of their home.

Critics watching the Senate forge the plan, however, question whether the bill would help families facing foreclosure or the lenders facing financial losses on repossessions.

Late today, Dodd and Shelby announced that final language on the Foreclosure Prevention Act of 2008, the proposed legislation, had been delayed until tomorrow.

But summary points released by Dodd and Shelby included $4 billion in Community Development Block Grant Funds to be used by communities hardest hit by foreclosures and delinquencies to purchase foreclosed homes at a discount and to rehabilitate or redevelop the homes to stabilize neighborhoods and stem the losses in house values of neighboring homes.

Jennifer Morris, McConnell’s press secretary, confirmed to WND today Senate Banking Committee chairman Christopher Dodd, D-Conn., and the committee’s ranking Republican, Sen. Richard Shelby of Alabama, held closed door meetings throughout the day finalizing the language of a bill to bring to the floor of the Senate.

Until language of the compromise bill is available, it remains unclear whether the $4 billion in grants would be available to prevent any families from losing their homes or would be available for community purchase only after foreclosed homes had been repossessed by lenders.

A position paper released by McConnell’s office called for state housing finance agencies to issue up to $10 billion in tax exempt bonds with the proceeds being used to refinance subprime mortgages.

Other key features sought by McConnell include providing $15,000 tax credits for the purchase of a home in or approaching foreclosure and extending the current three-month delay of any looming foreclosure for a returning GI deployed overseas to six months.

The compromise legislation also would provide $100 million in additional funding for the Neighborhood Reinvestment Corp. to be used this year.

The compromise language released by Dodd and Shelby today suggested the bill would delay foreclosures on returning GIs deployed overseas to nine months.

Also proposed in the compromise legislation were reforms to the Federal Housing Administration program, extending various limits to qualify additional families for FHA loans.

Realty Trac reported foreclosure filings during 2007 were up 75 percent from 2006, with more than 1 percent of all U.S. households in some stage of foreclosure during the year.

Last week, the Wall Street Journal reported 2 percent of all home loans were in foreclosure, double the rate over the past 28 years and the highest foreclosure rate since the Mortgage Banking Association began collecting data in 1979.

“The package that we agreed to is not perfect, nor will it solve all the problems that the economy and the American homeowners are facing today,” said a joint statement released by Dodd and Shelby. “But it is an important step, and sends a strong message to the American people that Congress is willing to put aside our partisan differences and come together to tackle the challenges at hand.”

According to Realty Trac, the top 10 states reporting foreclosures in Dec. 2007 were, in order: Nevada, California, Florida, Colorado, Arizona, Michigan, Ohio, Georgia, Illinois, and Massachusetts.

In one anecdote, the Denver Post told the story of a little girl who had written a note in a walk-in closet, “Dear Bedroom, I’m going to miss you. When I get older, I’ll buy you back.”

The Cleveland Plain Dealer reported yesterday Ohio has launched a program where 1,100 lawyers from across the state have volunteered under a “Save the Dream” program to provide free legal assistance to Ohioans making under $54,000 a year who are in danger of losing their homes.

The Denver Post reported yesterday home foreclosure liquidators are offering dispossessed homeowners as much as $900 simply for agreeing to leave the property without stealing appliances or otherwise damaging or vandalizing the property in their anger and frustration.

The paper disclosed data compiled by the Ohio Supreme Court showed more than 83,000 foreclosures were filed during 2007, the most in the history of the Buckeye State, while Cleveland, Akron, Toledo, Dayton, Columbus and Cincinnati were all ranked among the top 50 cities in the country in foreclosed properties.

The Federal Reserve Bank of New York has posted a dynamic map of subprime mortgage conditions in the United States, displaying statewide, county specific and zip code variations the condition of securitized, owner-occupied subprime mortgage loans.

On Monday, the New York Times reported the Congressional Budget Office is projecting a record 28 million Americans will receive food stamp assistance in 2008.

The Times also reported one in eight Michigan residents, 12.5 percent, are now receiving food stamps.

Slam doors on pets, too. Foreclosures

They’re arriving by the thousands every month, homeless, hapless victims of foreclosure.

Family pets, their lives upended by the ravaged finances of their owners, are landing in animal shelters in large numbers in some parts of the country.

“The fate of people’s pets tracks with their own financial fate,” says the ASPCA’s Steve Zawistowski. He adds that although some shelters have been largely unaffected, “there are pockets” where so many homeowners are losing their homes that the number of pets relinquished to shelters, turned loose or abandoned is increasing dramatically. The pockets probably will spread with a deteriorating economy, he says.

The situation is sufficiently worrisome that the Humane Society of the United States (HSUS) just created a $15,000 seed-money fund (and is seeking public contributions to it) to help shelters and rescue groups accommodate in the short term their local surge in homeless pets. And many shelters in hard-hit areas are devising programs to respond. Among them:

• The Sacramento SPCA, which took in 100 more dogs and cats for “moving” reasons (176) in the past four months of 2007 as in the same period in 2006, has developed an early-assistance program to help people find ways to keep their pets or make temporary-care arrangements before they reach the out-of-options stage, says director Rick Johnson.

“We’ll visit with the animals and we can meet with prospective landlords” when it appears, for example, that additional discussion might help a family keep the pet in new quarters. And, he says, the staff is willing to take whatever time it takes to discuss with owners the possibilities for keeping their animals.

• The Pennsylvania SPCA is waiving for foreclosure victims the fees associated with its “good-home guarantee” program, which promises the shelter will keep the pet as long as it takes to find a new home. “With everything else they’re going through, (people who foreclose) should not have to worry that their animal will be euthanized,” CEO Howard Nelson says. At least 10 families have taken advantage of the program in less than three months.

The Pennsylvania program is addressing one of animal welfare experts’ greatest concerns: that pet owners, worried that their animals will be euthanized at the shelter, are setting them loose or leaving them in empty houses and garages with some food and water. Often the abandoned animals aren’t found for days or weeks and are dead or dying, they say. And ultimately the survivors wind up in a shelter anyway.

As for the ones set free: Most house pets don’t do well on their own and are often injured in fights with predators or other animals, hit by vehicles or infected with diseases, experts say.

Though acknowledging that many pets left at shelters are eventually euthanized if they aren’t adopted, “if the animal is put in a shelter, at least she will have a chance and won’t endure all that suffering,” Zawistowski says.

The SPCA of Erie County, N.Y., is experiencing only a bump — about two a month — in foreclosure pets, says executive director Barbara Carr. But each is heartbreaking. She tells of a man who arrived at the shelter this month saying he had to give up his cat and two small dogs. When an employee walked outside to help him get the animals into the shelter, “she discovered that he had arrived in a U-Haul loaded with boxes and furniture. He had lost his home and had no place to go. The very last thing he did was surrender his animals.”

All three now have new homes.

HSUS and ASPCA have sent out advisories imploring people to plan for their animals in case their finances nosedive. Also, “we’re trying to get the word out for people to take note of what’s happening in the economy, understand that animals are expensive, and if you don’t have much cushion, now may not be a good time to get a pet,” says Stephanie Shain of HSUS.

Zawistowski hopes the question of foreclosure pets will prompt a national discussion. Hurricane Katrina resulted in a recognition that after natural disasters pets must be managed, “and we have, as a nation, set up systems to do so,” he says. It’s important to see that when people are displaced by economic disaster, “we also need to manage the pets and should establish systems for that.”