Thursday, January 26, 2006

Lawmakers Focus On Foreclosure 'Disaster': NC

This Charlotte report show lawmakers are taking notice of the foreclosure disaster in North Carolina. "N.C. House leaders on Wednesday began forming a study committee to attack the growing problem of home foreclosures in Charlotte and across the state.Rep. Walter Church, who will chair the committee, says the effort was spurred by the Observer's series last week on the rising number of foreclosures in the Charlotte area."

"The problem of foreclosures is racing out of control, he says. In almost two decades as head of a savings and loan in Valdese, Church said he foreclosed on only five or six loans. The Observer reported that on average, 11 Mecklenburg County homes are now sold in foreclosure auctions every business day."

"After three missed payments, a home can be seized and sold to repay the lender. An explosion of new loan products over the past decade make it easier than ever to buy a home, and easier than ever to lose one."

"N.C. Commissioner of Banks Joseph Smith says he favors listing the name of the person who arranges a loan, generally a mortgage broker, on public real estate documents. That would allow investigators and the public to see which loan-sellers are connected with foreclosures. Smith said the skyrocketing number of foreclosures is 'a disaster.' The failure of so many loans could undermine public confidence in the mortgage lending industry, he warned."

"Philip Humphries, executive director of the N.C. Appraisal Board, says adding appraisers' names to public real estate documents also would be a good step if it helps reduce foreclosures. If an appraiser inflates the value of a home, borrowers can receive loans larger than the amount anyone else would pay for the house."

"Alfred Ripley with the N.C. Justice Center says his group wants better record-keeping on the causes of foreclosures, especially to see if some industry professionals are taking actions that contribute to the foreclosure problem. 'There are people in the marketplace who are misleading consumers,' he said."

"The Observer found Mecklenburg has the highest rate of foreclosures per capita in the state. Foreclosures in the county have more than quadrupled in the past six years. About two-thirds of those home-loan failures involve new types of loans designed for borrowers with lower incomes or problem credit. More than 80 percent involved homes valued at $150,000 or less."

"That combination of easy credit and inexpensive homes caused clusters of foreclosures on more than 70 Mecklenburg streets, where at least 15 percent of the homes foreclosed between 2003 and early 2005. That's at least five times higher than the failure rate on all loans in the U.S. The newspaper found the high foreclosure rates depressed surrounding property values, trapping neighbors in homes they couldn't sell, even if they paid their mortgages on time."

6 Comments:

At 6:28 PM, Blogger Chip said...

This comment has been removed by a blog administrator.

 
At 6:30 PM, Blogger Chip said...

(cleaned up my typos)

The great majority of these homes cost less than $150,000. What's sad to me is that most of these folks are hard working, simple people with minimal incomes. What a shame they suckered into the easy loans, when they might have bought a doublewide that they could afford to make the payments on. The irony is that it will be like the dark humor in the Gulf Coast following the hurricanes -- homes will be taken away from people who could not pay the loans and, where Fannie/Freddie are involved, may well be given out with free rent to other poor people.

Given the Net, highways, phones and an endless supply of writers, I suspect that the stories that will follow these countless individual tragedies easily will outnumber the stories that came out of the dustbowl and the Great Depression.

BTW, if you read ths blog, don't forget to thank Ben. I do every time I read his posts.

 
At 6:49 PM, Blogger mort_fin said...

most of these probably aren't Fannie/Freddie. Last week's article said 25% were FHA, this week's says most are "exotic" which Fannie/Freddie generally don't purchase. Thank FHA and whoever it is that's been buying all this exotic subprime paper.

 
At 10:45 PM, Blogger Chip said...

FHA instead of Fannie? -- still a tragedy. Over the years, I've spent time in many small towns in the American South. They are filled with humble, church-going people who would never think of keeping your wallet if they found it. In recent years, many of these folks, almost always the younger "starter" ones, have been duped by the charlatans who proffered easy-payment mortgages.

Ours began as a country with a strong sense of morality. Socialism is, pretty much by definition, the absense of morality. While I believe that a poor man who can handle a broom should be given a meal only after sweeping up first, I also believe that those who are relatively more gifted are obliged to protect the lower-IQ types who succumb to the snake-oil salesmen. Without the "help" of government.

How that is done is the stuff of great debate.

 
At 11:14 PM, Blogger Out at the peak said...

Wow, I didn't expect this from NC this early. Their median price is dirt compared to CA, NY.

 
At 2:02 PM, Blogger Loren said...

I lived in NC for a little over two years. I'd say that people in the RTP area are typical Americans. I don't know about Charlotte, but I did like Boone and Ashville. The coast is nice too. My opinion of the more rural areas I won't post online.

I am not surprised that NC has a problem. Prices there move slowly and we had trouble selling our house in 2000. In 98 when we were looking to buy we made an offer on a house that turned out to be in forclosure (divorce and 120% LTV mortgage), the next house we made an offer on failed inspection (daylight visible in attic, rotted siding with a fresh coat of paint, uneven foundation settlement, AC didn't work, heat didn't work). The owner took it off the market when he saw the report.

Building standards in NC are sparsely enforced. The house we finally bought had RTV sealed drain pipes, plugged soffit vents, no roof venting on the front, a deck built over the heat pump.......

 

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