Friday, September 01, 2006

Mansions, Condos In Default: Dallas

The Dallas News reports on foreclosures in that city. "Kemisha Jones doesn't want to leave her 2-year-old southeast Dallas home. But the single mother may not have a choice. She's one of more than 28,000 North Texans whose homes have been posted for foreclosure this year."

"Her troubles began with thousands of dollars in family medical expenses. A surge in property tax bills added to her finance woes. 'My house payments went from $871 to $1,385 a month,' said Ms. Jones, whose house is valued at about $106,000. 'For a while I was making it – I was rocking and rolling,' she said. 'But now I realize that I can't afford this house.'"

"The number of mortgage defaults in the Dallas-Fort Worth area is up 30 percent this year. In North Texas, rising property taxes and increasing mortgage rates on adjustable loans are also taking a toll. 'In two-thirds of the cases, unemployment or curtailment of income or some kind of illness or death in the family have been the trigger events that led to defaults,' said Freddie Mac chief economist Frank Nothaft."

"For Eric Fenton, who gave up his house in June, the loss of overtime income in his telecommunications job came at the same time his mortgage payments ratcheted up. 'Since I had to get an adjustable rate loan, I watched my payments grow from $700 to $900,' Mr. Fenton said. 'And then utilities, they went from $200 to $400.'"
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"Mr. Fenton tried to sell his Dallas house but had no luck. 'My house was listed for over two years at its tax-appraised value, $113,000, with no lookers,' he said."

"North Texas' low home appreciation rates make it difficult for many homeowners to get out of their house when they wind up in financial trouble. That adds to the foreclosure bubble, said George Roddy, president of Addison-based Foreclosure Listing Service. 'Especially if they are financing 110 percent of the property to begin with,' Mr. Roddy said. 'They finance all the closing costs and end up owing the mortgage company if they decide to sell.'"

"Foreclosure Listing Service has found that about 44 percent of homes posted for foreclosure each month actually sell at auction. Through the first six months of 2006, lenders had taken back 8,452 D-FW area homes. The average mortgage on the houses foreclosed on was $148,418."

"And a look at the monthly foreclosure postings proves that hard times hit in all communities. Everything from million-dollar mansions in exclusive Plano neighborhoods to $32,000 condos in East Dallas are in foreclosure, county records show."

"'Customers have gotten themselves into loans they probably didn't understand,' said Bob Caruso, a mortgage servicing executive with Bank of America. 'Loans with adjustable rates do actually adjust upward.'"

"Gordon Griffith and his family are leaving their Garland home at the end of the month. 'We agreed to an adjustable rate mortgage when we refinanced the house, and now it is killing us,' Mr. Griffith said. 'The rate is going up every six months. We have been juggling so many bills trying to keep the house, our credit is terrible and refinancing with another company is not possible either,' he said."

"Fort Worth mortgage originator Vernetta Wills blames some homebuilders for not correctly estimating taxes on the houses they sell. Sometimes property tax estimates are just for the lot and don't include the new home being built. 'If the builders in the area would stop putting people in houses that they cannot afford and qualify them with the correct taxes, this would not happen,' she said."

"Most troubling for North Texas homeowners, the flood of foreclosures could affect the overall housing market, industry analysts say. In the late 1980s and early 1990s, a frenzy of home foreclosures caused by the regional economic collapse contributed to more than a 25 percent decline in overall residential values."

"'We know that most of the foreclosures are going back to the lenders and then being offered for resale,' economist James Gaines said. 'We also know that historically, the lenders are generally forced to offer the properties at discounts in order to move them.'"

"Connie Zetterlund, a Dallas real estate agent who specializes in foreclosed-home resales, said the number of such listings is ballooning. So far, lenders have been unwilling to slash their prices, she said. 'I don't think they have gotten the news that the market is slowing and there is a glut of foreclosures,' Ms. Zetterlund said."

"The timing is bad for these distressed properties to land on the market. Overall home resales have been dropping in recent months. 'Everyone of us needs to be heads-up about what this is saying about the stability of our economy,' Ms. Cunningham said. 'Housing has held up our economy for so long.'"


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