INC NEWS - Could foreclosures cripple neighborhoods? (N&O)

[RW Pickle]

I think some of it is just bad reporting, but other parts have some good
info. Forest Hills has had it's own foreclosures over the last few years.
But I don't think any of them were related to sub-prime problems. It was
more about divorces or seperations where the individuals just walked and
left the bank hanging. Like a house on Wilshire that was sold by the bank
at auction. The owner couldn't get $1.2M for it (I suspect they had pulled
all of the equity out of it if not more) and walked away. It sold at
auction for $510K. The house beside me on Beverly was much the same. The
gay partners who had it, split. The house was held as colateral in another
deal and it forced the person who had the second mortgage paperwork to buy
it at bank auction just to save his interests. The St Theresa houses are
probably another story. I know of one case over there where the individual
who owned them leveraged them to the max and then just walked away with
all the funds letting the bank come in with foreclosure. Self Help bought
his properties from the bank and has torn all but one down. So
foreclosure, even the ones today, aren't all directly related to the
sub-prime issues. They happen all the time. In fact, I can not for the
life of me understand why these folks involved in the sub-prime problems
just wouldn't go and refinance the loan. It's not that big of a thing to
do. Financial institutions don't want to own houses so they'll typically
work with owners. There's always more to these stories than ever gets
told. And some of the story ends up being just left out...

RWP
27 Beverly

> Could foreclosures cripple neighborhoods?
> When those with subprime mortgages lose their homes, property values drop
> and blight creeps in
> By Anne Blythe, News & Observer, 13 July 2008
>
> [Below is list of Durham foreclosures by neighborhood; See full report
> here
> http://www.cra-nc.org/files/Download/Foreclosure%20Report%2022508.pdf]
>
> When Tony and Mary Garrett bought an old bungalow in East Durham seven
> years ago, they were greeted with scores of warnings about fixing up a
> home in a neighborhood plagued by crime.
>
> There were few cautions, though, about their subprime loan with interest
> rates that would balloon to the point that their dream of homeownership
> almost burst.
>
> "We went into this with our eyes wide shut, so to speak," Tony Garrett
> said. "Every mortgage package should have red flags beside something that
> is going to hurt you."
>
> The Garretts worried they might have to surrender their home to a mortgage
> company mired in the subprime lending crisis. But thanks to the advice of
> a church elder and a refinancing orchestrated by the Durham Regional
> Community Development Group, the couple staved off foreclosure.
>
> The Garretts' success story brought joyful tidings beyond their one
> household.
>
> Had they been forced to walk away from their home, a neighborhood railing
> against crime and urban blight might have had one more abandoned property
> in its midst. As devastating as foreclosure can be for one family, it also
> can tear at the fabric of a neighborhood, a community, an entire region.
>
> In Durham, a city where taxpayers, community development groups and
> nonprofits have invested much time and money into reinvigorating
> neighborhoods in decline, no one wants to see the added layer of problems
> a mortgage crisis might bring.
>
> The Community Reinvestment Association of North Carolina, a Durham-based
> organization that has pushed for state and federal regulatory change while
> fighting predatory lending practices, recently released an extensive
> analysis of foreclosures in the Bull City.
>
> "We chose Durham because it is our own backyard," said Adam Rust, one of
> the researchers and authors of the study "Empty Houses and Broken Dreams."
> "I would say Durham is probably not the worst case around. There certainly
> are more foreclosure actions going on in Wake County, but we haven't done
> enough study to talk about what's going on there. Orange County seems to
> be immune."
>
> As home foreclosures hit record levels across the country, the Triangle
> real estate market is feeling the pinch more and more.
>
> Foreclosure filings in the Triangle began rising in 2006 and increased
> 14.6 percent last year to a total of 7,388.
>
> In the first six months of 2007, 3,578 foreclosure filings took place in
> Wake, Durham, Orange and Johnston counties. That number rose to nearly
> 4,000 for the first six months of this year.
>
> Even with the Federal Reserve promising new regulations in the coming week
> for mortgage lending, housing experts, both nationally and locally, say
> foreclosure numbers will keep rising for the foreseeable future.
>
> While California, Florida, Nevada and Arizona continue to be the
> hardest-hit states, Triangle housing advocates and counselors are hearing
> more hardscrabble stories that don't always end as happily as the
> Garretts'.
>
> "It is becoming a depressing job," said Angella Coleman, a housing
> counselor at the nonprofit Durham Affordable Housing Coalition. "I'm
> trying to keep hope alive, but I'm waving my flag here: 'Help me. Help
> me.' "
>
> Foreclosure's ripple effect
>
> Some lenders are more willing than others to modify a loan to avoid
> foreclosure. In some cases, the lenders only have access to insurance to
> cover losses when there is foreclosure. Others are restricted by investors
> who don't want to lose returns.
>
> A Granville County woman battling cancer came in for help recently because
> she got behind on her mortgage payments while getting treatment.
>
> A Chatham County woman on disability leave sought assistance after falling
> one month behind on her housing payments.
>
> "There's an immediate impact to the household that experiences
> foreclosure," said Rust. "But also there are collateral victims."
>
> Renters can be evicted with little notice.
>
> When the city or county takes a home, property taxes don't come in at that
> time.
>
> In some neighborhoods, homes might be sold at distressed sales prices or
> sit vacant for months and fall into disrepair.
>
> "When homes are boarded up, they become invitations for the setting of
> crime," Rust said. "All kinds of things can happen."
>
> Foreclosures in Durham, Rust says, are not limited to the lower-income
> neighborhoods. In the first 10 months of last year, 73 of Durham's 123
> neighborhoods had a home enter default or foreclosure.
>
> In Milan Woods, a suburban neighborhood filled with police officers,
> construction workers, nurses and other professionals with a median
> household income of $53,000, nine of 230 homes were either in foreclosure
> or default at that time.
>
> Foreclosures also were reported in the Watts-Hillandale neighborhood near
> Duke University, Hope Valley Farms North, Woodcroft and Duke Park.
>
> The city's black population has been hit the hardest, with
> African-Americans living in 78 percent of the homes in foreclosure or
> default, Rust said.
>
> One in six households in the foreclosure process is owned by someone older
> than 55.
>
> East Durham, where the Garretts live, is a neighborhood where most of the
> homes are not owner-occupied. But of those that are, most of the owners
> are older than 55, the association's report found.
>
> Neighbors have come together in recent years to fight urban blight and
> crime. Police did a rough count of the neighborhood recently and reported
> that 599 of the 3,424 houses were abandoned or vacant.
>
> Ray Eurquhart, a 60-year-old homeowner in Southside, a neighborhood just
> south of the Durham Bulls Athletic Park, has fought for years against the
> problems that come with boarded-up houses.
>
> "We're fighting the gang-bangers," Eurquhart said. "We're fighting the
> slumlords. The infrastructure over here is terrible."
>
> Although the Southside neighborhood has the greatest density of
> foreclosures with 11 in 0.09 square miles, based on the association's
> report, it is the paucity of owner-occupied homes that bothers Eurquhart
> more. If properties were kept up better and abandoned houses refurbished
> and put back on the market, higher rents could be charged and the
> neighborhood revitalized.
>
> "We could save the kids from the gang-bangers, get the girls and women off
> the streets," Eurquhart said. "That's what we're trying to do to save this
> neighborhood."
>
> Under the radar
>
> While vacant homes and For Sale signs often indicate foreclosures, it is
> not always evident that a problem exists.
>
> Melissa Rooney, an active member of the Fairfield neighborhood, was
> surprised to hear that 10 percent of the 360 homes were reported to be in
> foreclosure last year.
>
> "I live in an upper middle-class neighborhood," Rooney said. "It's
> certainly under the radar over here. People tend to keep things to
> themselves."
>
> Housing analysts and advocates say neighborhoods that are open about
> foreclosure are better equipped to stave off long-term problems.
>
> A study by the Woodstock Institute shows that foreclosures routinely
> decrease property values of surrounding homes. After studying
> neighborhoods in Chicago, researchers estimated a 0.9 percent devaluation
> for houses within an eighth of a mile of a foreclosed property.
>
> "It has a terrible impact on the surrounding residents," said Lorisa
> Seibel, a community organizer at the Durham Affordable Housing Coalition.
> "When a house is lost to foreclosure, it seems to sit vacant for a long
> time. First the grass grows, then it falls into disrepair. ... It used to
> be concentrated in lower-income neighborhoods where people weren't getting
> good loans or weren't able to pay back their loans. Now, you're also
> seeing more middle-income neighborhoods."
>
> This summer, unlike last, the Garrett house at 303 N. Driver St. is filled
> with hope.
>
> Sunday dinners draw lots of family. Grandchildren are in and out
> throughout the week.
>
> Neighbors know the contractor and his wife are there for the long haul.
>
> "This," Tony Garrett said, "is stability."
>
> ****
>
> Foreclosure Reports by Neighborhood
>
> Fairfield 36
>
> Greysons Green 18
>
> Cleveland-Holloway 13
>
> Parkwood 12
>
> Southside 11
>
> Old North Durham 11
>
> Milan Woods 9
>
> Hope Valley Farms North 9
>
> Woodcroft 9
>
> Colonial Village 8
>
> Northgate Park 8
>
> Penrith 8
>
> Latta Road 8
>
> Albright 7
>
> Fisher Heights 6
>
> C.C. Spaulding 6
>
> Grove Park 6
>
> Duke Park 6
>
> Horton Hills 5
>
> Watts Hospital-Hillandale 5
>
> Includes homes at addresses within designated neighborhoods, in
> neighborhoods with five or more notices of default or auction sales
> recorded in the first 10 months of 2007.
>
> source:
> http://www.cra-nc.org/files/Download/Foreclosure%20Report%2022508.pdf
>
> ****
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