Posts Tagged ‘ohio’

Reports coming in from Ohio show that the tenants are the silent victims of the foreclosure crisis. Their voices remain unheard. The income of the ordinary people is also going down because of the foreclosure tornado.

With more and more people being evicted from their houses the demand for rented accommodation has gone up. A recent survey shows that tenants now occupy 30% of all the residential properties. Another reading shows that the income of Ohioans is going down. Tenants have few legal rights and are at the mercy of unscrupulous landlords as well as scammers.

In Cuyahoga County foreclosure filings are rising according to the findings of Policy Matters Ohio. The study is mainly concentrated in Cuyahoga County. It is a non-profit body without any party affiliations delving in economic research. Residential foreclosures increased by 8% from 2007. The number of foreclosed houses occupied by tenants also increased but at a higher rate than the previous category. Renters occupied 30% of the residential properties that were posted in 2007.

Tenants comprise of over a third of the population of Cuyahoga County. They suffer the same trauma as the owners occupying houses but with less focus and fewer avenues of redress or escape. They are not considered to be part of the foreclosure process.

Most of the families are hardly given any decent time before being asked to vacate. To shift suddenly they have to incur significant expenses. It dramatically changes their lifestyle. They usually lose their security deposits and have to pay higher rents for the next shelter and suffer the attendant costs of shifting and storage. For the average family it calculates to $2,500. A rough estimate is that tenants have suffered in all, losses amounting to $10 million.

Over 35% of the foreclosure postings of Cleveland counting to 2,586 and East Cleveland counting to 175 are related to rented houses. Most of the houses in the inner-ring suburbs suffered considerable rise in tenanted foreclosure listings. Report from Cleveland Housing Court show that number of houses being foreclosed having tenants have doubled.

The report suggests enacting of laws for the protection of renters at the state and federal level. Proper and timely notice should be made compulsory. Loans (with no or negligible interest) should be made available for renters to be able to shift and set up home again. The banks should focus on incentives rather than evictions.

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The Cleveland foreclosure crisis is worsening from day to day. The neighbourhoods of the city are dotted with vacant houses, owned by lenders or the banks. Financial bodies now possess more than 11,000 properties in Cuyahoga County according to project reports undertaken by Case Western Reserve University. The numbers account for more than half the units in Cleveland. The banks are selling these houses for peanuts to investors who are snatching them up for some hundred dollars!

James Odell Barnes has for 30 years been the first person Wall Street lenders called when they wanted to get rid of foreclosed houses. Currently Barnes is buying 100 houses in a week in Cleveland and Detroit. He is a broker and helps investors buy houses for as low a rate as $250 per house. In turn the investors sell them at a price that is 20 or 30 times higher than what they paid. David Green is a worker in a restaurant. He is seeing hand written signs on houses in the locality offering rent at less than half the price his restaurant is paying. Green has now entered the game and trying to fix a house he had bought for $18,000 in the middle of the town. Like him there had been 100 to 150 buyers who had bought similar houses from one Jeff Ball. Ball explains that he is meticulously matches the houses with the income of the potential buyers to make the transaction viable and affordable. This scheme greatly helps those with bad credit.

But it has not been smooth sailing for all the brokers. Some have become very unpopular. Destiny Ventures of Tulsa has been twice tried in court for violating code. They did not come to court and were unwilling to pay fines. The court seized a bank account to adjust one set of fines.

At this point another danger is brewing following on the footsteps of the foreclosure crisis. It is the investors who are buying up units for a song and then flipping them for neat profits. When local buyers are not available these sellers go online. Five buyers have contacted from Canada to buy houses in Toledo and Cleveland. The local administration is a bit worried about the influx of outsiders who might not be held accountable for the health of the locality, as they are interested only in the flipping.

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This time the women voters in
Clermont County are readying to battle foreclosures. The Clermont County League of Women Voters will be addressing the foreclosure problem during their meeting in May this year.

Foreclosures have churned into a national problem during the past few years. In Clermont County during 2006 there had been 2006 foreclosures as per figures released by Legal Aid Society of Southwest Ohio. In 2007 there had been over 1,000 foreclosures.

Analysts opine that there are three major factors behind this crisis. Firstly the credit standards had been too lax. It allowed people with modest income to be lured into buying houses they could ill afford. The temptation of no down payments and initial teaser rates were too much for them to resist. This predatory lending has harmed society and the economy. Predatory lending is that type of granting loans when the lender does not take into consideration the ability of the borrower to repay. On top of this the interest rates are usually very high. Loans were sanctioned after inflating the value of the property. But when the latter came down to realistic levels the loan amount remained higher than the price of the unit. Thus even by selling the house the borrower could not avoid the stigma of foreclosure. Predatory loans are also saddled with exorbitant pre-payment penalties making it impossible for the borrower to refinance.

Secondly the prices of essentials have suddenly started to increase. Medical bills, repair expenses have shot up while the income has often been going down if not been actually interrupted. Few weeks of unemployment will automatically lead to default in mortgage payments and end up in foreclosures.

The general depression in the economy has led to plants downing shutters. Layoffs have become common. Usually the income from two family members contributed to the running of the mortgage. Thus even if one lost a job the mortgage suffered. Illness and divorce have their negative impact also.

The women voters en bloc actively gave support to a bill passed in the previous year aimed at controlling predatory lending. The new law is being enforced now and it is hoped that it will address the abuses in the mortgage industry. The foreclosure on old loans however will continue to harangue society for many years to come. With interest rates rising there is apprehension that the country will be flooded anew with foreclosures.

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Four years ago Ellen Scrivens had bought a house. She refinanced her loan contracting an interest-only loan but two months later she lost her job and began to falter in her monthly payments. At the time of refinancing the lender had said that the monthly payment of about $2,000 included taxes and insurance. But in reality it did not. However with a running job she could have managed the installment. But six months without a job shook her foundations. Scrivens now sought the help of a counseling agency. She contacted Frederick County Action Agency, and Joe Baldi ex-alderman took up her case. Baldi and his colleague Peterson have taken the lead in this matter of helping people to stay on in the houses that are their homes.

Many people are ashamed to come out in the open about their impending foreclosure because of social stigma. The foreclosure fires rage on with no signs of the flames being doused. The numbers seeking help from FCCAA have doubled each quarter. It went up from 12 individuals in the third quarter to 24 in the fourth and jumping to 48 during the first quarter of this year. These numbers are just the tip of the iceberg. Thousands are in need of help.

Keith Patterson, a real estate agent blames defective government policy for this debacle. Even the state’s highest tax official, Comptroller Peter Franchot lays the blame on the Congress. For the last few years Washington has become the Wild West where any and everything is allowed. A price has to be paid by all for many years to come for this laxity he went on to add. They just looked the other way while all this was going on in the sub-prime category. The matter of minimum down payment, proof of income levels as well as floating interest rates was ignored. The lenders asked for 80% on the first mortgage, 10% on the second one and 10% on the third. Sometimes it was 80/20 contracts. The second and third agreements were at much higher rates ranging from 10% to 15%. At first the going was good but soon it became a problem for the mortgage industry when with falling real estate these mortgages could no longer be sold to Walls Street.

However the good news is that free help is available in Frederick County if foreclosure victims seek timely help.

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Foreclosures have hit the nation with Ohio being one of its worst targets. It has had its effect on the housing market where the sales have gone down by 16.8% from what it was in the previous year. This is according to the Ohio Association of Realtors. The example of the 10th Senate district can be cited. There were 10.4% lesser number of house transactions of sale and purchase. This is largely because of the increase in number of foreclosures. The Mortgage Bankers Association stated that Ohio has the highest number of foreclosures in the state.
Foreclosures affect not only the individuals and their families but also the entire community. Abandoned houses pose health hazards and attract criminals. This in turn causes the value of neighbouring houses to fall.

Ohio General Assembly and other state bodies are trying to find out legal means and programmes to protect Ohio from foreclosures. In September last year the Ohio Homebuyer’s Protection Act became effective. This made it compulsory for brokers and lenders to complete education course and obtain license before during business. It also included a note of warning that they could be hauled up by the court for any fraudulent activities contradicting the Consumer Sales Practice. The licensed brokers and agents would have to act bearing in mind the welfare of their clients. This would save consumers from predatory lenders.

Ohio state has announced with much fanfare its Save the Dream Foreclosure Prevention Public Awareness Campaign. To do so help has been taken of radio and television slots aiming to make the public aware of the grave implications of mortgage loans and the subsequent foreclosures that may follow if they delay action in seeking help.

The Bush administration in Washington is acting along similar lines so that borrowers are able to refinance to more affordable mortgages and thus avoid further foreclosures. The problem is that the worth of the property has now become less than the loan amount. This is because of the debacle in the real estate market following the foreclosure tsunami. The plan is that FHA lenders would forgive part of the loans by negotiating smaller mortgages. For this the lenders would get the support of the federal housing administration. House owners would also get free advise from government approved counselors. The contacts can be found over the website or a newly installed hotline. The dream of every American owning a house surrounded by a white fence continues to dominate the country.

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A recently given Ohio appellate court decision might give the teeth Ohio’s state government requires to halt increasing foreclosures.

Last December the attorney general of Ohio, Marc Dann was not successful with 40 foreclosure cases in the state. These could not be dismissed. However the ruling on 7 of these is still pending. Tom Winters, the first assistant secretary to the attorney general says that a ruling by the court on 20th March by the 10th District Court of Appeals , Columbus, might turn the tide in their favour. This might be applied to other similar cases.

The attorney general’s office wanted the 40 cases to be dismissed because Ohio had been named as the defendant. It is a routine process for lenders to name the state and sometimes the city as well as the county as defendants together with the name of the borrower. This is because it is presumed that there may be tax defaults. It is a sort of ‘shot gun’ approach. The motions were dismissed because the state did not have any interest in the unit. Some lenders backed out and the state was denied in other instances. But the state did not get the chance as yet to argue that the lenders could not show clearly who owned the mortgages at the time of foreclosure. The message is that they should get their cases clear before filing.

In another move the attorney general’s office is trying to see that low and modest income families get free legal help while working out a settlement with the lenders. It will be great if the pace of foreclosure filings can be slowed down so that houses are not abandoned. But so far nothing has yet happened to crow about.

In 2007 Ohio stood 7th in the national foreclosure ratings with nearly 90,000 properties in some stage of foreclosure. It calculates to one out of 56 houses being in foreclosure. The state however is keen to help the at-risk house owners. A free toll free numbers has been started as a help line. The programme has been named Save the Dream by which legal help and advice will be available to the needy. There are 8 to 10 personnel working in the office ready to directly talk with individual sufferers to see which remedial measures will suit whom. The programme officially made its debut on 1st April 2008.

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More than $3 million has been sanctioned by the Ohio Housing Finance Agency. It will enable counseling agencies to operate with counseling through 18 centres across the state. This $3.06 million grant emanates from the National Foreclosure Mitigation Counseling Program and it is part of $180 million action taken by the Congress in its fiscal 2008 appropriations bill. The programme funding is being activated through NeighborWorks America based in Washington DC dealing with housing matters.

How much each organization will get is not being specified until finalization of contracts. One of the beneficiaries will be Mid-Ohio Regional Planning Commission based in Columbus. In south east Ohio, the Corporation for Ohio Appalachian Development was declared qualified for the federal grant to serve the people of that region. Also on the qualified list was Community Action Commission of Fayette County southwest of Central Ohio. More than half of the agencies selected are concentrated in and around Cleveland. Foreclosures have been the highest making it rank sixth in the foreclosure race amongst all the metropolitan cities in the country.

The country is in the grip of a foreclosure tsunami. Although the primary accused is the sub-prime floating interest rate mortgage there are many other factors at play that have aggravated the situation – a situation that has caused whispers of recession being heard. Since 9/11 the stock market has been wobbly. There have been job losses. Detroit is one of the worst hits with the automobile industry floundering. Population levels have also gone down. Together with this medical bills have gone up and divorces being rampant have caused instability in the social structure. To add fuel to the fire a loan culture came to be aggressively sold via the credit card craze. It was thought that with money being pumped into the market by consumers, it would give the flagging economy a kick. Nothing happened. People kept on taking loans to get out of other loans. Into this mess crept in sub-prime loans meant to cater to those who could not qualify for prime loans because of modest income and shaky credit. The loans were aggressively peddled lured by commission and investment hopes. The general public were made pawns to snap up loans they could not run. The scheme backfired with lenders having taken on more foreclosures than they could digest. Foreclosures now dot the desolate land. No remedy has been found – only short term palliatives are being introduced.

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The Democrats have brought in a bill that if made effective will curb further foreclosures by changing laws related to bankruptcy. This was the opinion given by Senate majority leader, Harry Reid, Democrat from Nevada last Thursday. He apprehended that in all likelihood Republicans will block the bill. The test vote might extend up to Friday latest. If the Republicans stall the limited debate Reid will try to bring it back to the Senate floor the following week. He said that he would permit amendments to the bill that White House has threatened to veto.

He qualified his statement by adding that the amendments would relate to the present housing problems that has entangled 2 million house owners who are all set to face foreclosures and will not include other red hot issues like estate taxes. The Republicans in the Senate are scheduled to present their own interpretations of the housing bill on Thursday.
The clause in the bill that is causing controversy is about allowing judges to cancel bankruptcy debts.

If the bill is blocked by the Republicans Reid will manage to bring it back to the Senate floor sometime late the following week. By then the Ohio and Texas presidential primaries will be completed and the two senators, Clinton and Obama, backing the bill will return to Washington to give support to the legislation.

The criticism leveled by the Republicans is that the bill is actually a bail out to the lender’s lobby. The bankruptcy reform provision will give the right to judges to modify the principal of the mortgages on first time residences. The new measure is more bold than the economic stimulus package signed by Bush last Wednesday. This bill termed Foreclosure Prevention Act of 2008 includes many items that the Democrats had wanted to be incorporated in the original package related to economic stimulus. The Democrats in the Senate are keen to see the bill bypassed in the usual committee review process so as to fast track it for consideration when the Congress returns after the recess. The bill plays up to the popular sentiments of voters and there are many members seeking re-election. As such the bill must be enacted into law – opines many. Reid feels that in the face of an uncertain economy the bill is the right dose of medicine. The bill should be carefully considered so that those seeking help are nothurt by it.

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