The Foreclosure Report

Kansas Housing Market Needs 'Big Bulldozer'

The Kansas City Star has this on foreclosures in that state. "The number of home foreclosures in Kansas has increased over the past year, a new report says. There were 436 mortgage foreclosures in the state in April, slightly more than double the number from April 2005. Through the first three months of 2006, lenders foreclosed on 600 homes, about one-third more than the 440 foreclosed during the same period a year ago."

"Kirk McClure, at the University of Kansas, said he thinks declining home values in western Kansas contributed to many of the foreclosures. For example, McClure said someone holding a $100,000 mortgage on a home valued at $90,000 has little incentive to keep making payments."

"'One of the best tools for our housing market in western Kansas is a big bulldozer,' he said. 'We've got too many units.'"

"McClure also said lenders offering '100 percent financed, no-money-down' loans haven't helped people with inconsistent incomes. 'If we take someone whose income is very low and it's irregular, and we get them into a home that they can't sustain two years, three years down the road, we have not done them a service,' he said. 'There's a reason a bank turns somebody down.'"

"Kirk Lowry, vice president of Farmers State Bank in Atwood, also blamed 'brain-dead finance companies' for approving loans worth more than the property. The companies, few of which regularly do business in the area, roll fees into the mortgage payment, meaning that if the owner defaults, he or she is left with almost no equity."

"'It's just as easy to say it's rent,' said Lowry."

"Still, McClure noted the figures show the rate of foreclosures in Kansas is still half the national average, meaning Kansas still has a low enough cost of living to make home ownership affordable for most people. 'Our incomes aren't great, but our ratio of house price to income is much more comfortable,' he said."

posted by Ben Jones @ 3:51 PM