Posts Tagged ‘wayne’

It is a three-pronged attack that will pin down house owners as foreclosures march relentlessly on. Taxes will rise, value of houses will fall together in shrinkage in services. These three curses will hibernate but sprout in spring. It is inevitable – the seeds having been sown by foreclosures.

To take few examples – Oakland County will see three consecutive years of decline in property tax amounting to $27.5 million; in Wayne County the fiscal year that ended on 30th September the value of property declined in all the 43 municipalities. Thus more and more communities are apprehending reduced collection of property tax during 2008 because of foreclosures. Michigan State will be lighter by $27.5 million in taxes in the forthcoming year. This reduction will tell upon less of funds for public schools, parks, jails and community colleges.

Oakland community personnel are gearing up to face a barrage of questions from house owners contesting tax assessments and demanding more community services. The only way the government can provide services is to raise taxes somehow. But there will be angry reactions to imposition of increased house taxes. Why should the common man pay more when the real estate price has gone down?

Those who have recently bought houses will not be affected. House owners who are residing for quite a number of years and have taken advantage of the state law that gave protection from rise even during the housing boom are not going to be spared now. The same law will now fix their taxes at par with the actual market value – means a rise from what it was before. Oakland will see tax collection shrink to 0.4% after many years of growth. The State government is fumbling to manage with state aid and skyrocketing health coverage costs for employees. The outcome is that 1,600 police personnel, more than 2,000 in the fire services have lost their jobs since the turn of this century. In each community there are more plans about layoffs.

Some city officials have already started to reschedule their finances. Decision will have to be taken about what to snip off. A revenue loss might be equivalent to funds required to keep streetlights on! In Warren, Detroit’s second largest city, two thirds of the budget rolls in from property taxes. It will be difficult to prune and trim a deficit of 1.5%.

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One can hear the clink of the sword – it is expected to be brandished any moment. The Bush administration has come to an understanding with jumbo lenders and a freeze will be announced for five years. These are the lines of expectation. No details are as yet available.

The reaction to the news in Detroit even without official confirmation is positive. At least the government is doing something. In Michigan the foreclosure problem is exacerbated with unemployment issues –7.7% unemployed. It is the highest in the nation. This point alone will determine how effective other palliative efforts on foreclosures will be. The problem is jobs. Let the people have jobs and foreclosures will automatically be arrested – is the view of many.
In Lansing the state legislature passed a law lowering fixed rate loans but it is unsure what its fate will be in the Senate. Lately Washington has been showing increasing interest. The Federal Housing Administration has been modernized. It can raise more amounts for lending purposes and stringent laws have been passed to rope in predatory lending. Democrat Debbie Stabenow from Michigan has brought another proposal for waiving taxes on those mortgages that are settled for less the original value of the loan. Stabenow rues the slow pace of action because it is speed that is of vital importance in this matter. The delay is also being questioned. Some want quick fixes while others decry hasty action might lead to more foreclosures. Republican Walberg voted against a law that would curb aggressive lending saying that this would result in less money being available for loans, which would have an adverse effect on the entire market. However he clarified that he was in general for regulating the industry. This is especially required in Michigan that has no controls over agents.

An appropriation bill is most likely to be passed for sanctioning $200 million to non-profit organizations engaged in foreclosure counseling. Counselors play a key role in resolving the delicate issue of bringing together borrowers and lenders to thrash out matters amicably.
Meanwhile everyone is waiting with bated breath for the final announcement by Bush. The President has always harped on the fact that the taxpayer’s money should not be used to bail out those who had made lousy loans. It leaves many questions unanswered – who are going to benefit and how are the lenders going to react?

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Michigan ranked 6th in the country with 15,565 foreclosure in some stage of foreclosure or the other. It showed an 11% rise above July figures and a 126% high jump from the month of August in the previous year. The numbers tagged to Michigan are inclusive of 3,534 units that went into delinquency, 6,572 that received notices for trustee sale and 5,459 that had already been taken over by the bank.

In Wayne County the foreclosure versus household ratio is 1:87. It ranks 4th in the country. The highest is in Modesto, California with 1:79 during August. The five top rankers are Nevada, California, Florida, Georgia and Ohio.

What is causing grave anxiety is that these figures are just the tip of the iceberg. In the near future more foreclosure activity is expected when a sizable number of sub-prime mortgage loans will reset the interest rates.

The sub-prime debacle is a clear case of a dream that has turned into the reality of a nightmare. The scheme was launched to help those with weak credit to be able to avail of house loans and live under their own roof. But predatory lending on the part of lenders and greed on that of the borrowers made things go awry. After the honeymoon period of low monthly repayment plans when the rates began to adjust to higher figures the borrowers found it impossible to make ends meet. It most of the cases the rise was more than double. One by one the houses fell into foreclosure.
There are many factors behind the inability to pay increased rates. Firstly many had invested in housing units being sure that property prices could never fall.

Thus they expected a neat profit. But the opposite happened and there was not enough equity left to clear dues leave alone profits. Secondly initially the value of the houses had been inflated to expedite the process of a handsome loan. But with time the balloon burst and the real price showed up. Thirdly the income of the borrowers was not always correct and this led to the inevitable. Added to these was the usual cycle of death, disease and calamity of unemployment that might well overtake any family anytime. All these factors contributed to the landslide that is showing no signs of slowing down despite help from Washington.

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What Danielle faced could happen to anybody. There were the usual expenditures, the caring of four children and mortgage dues of $1,162 per month. She was pulling along but things came to a head when she lost her job. Two years ago she had bought the house on loan in Detroit. But now it was out of the question for her to hope to raise the money and keep the house.

She was defaulting since last December but did not join the ranks of those 16,351 in Detroit who had had their properties foreclosed. Danielle negotiated with her lender and came to an agreement. She agreed to short sell her house. It means that the lender agrees to a lower price than what the seller owed. A short sale is different from the upside-down sale. In the latter case when foreclosure is not knocking at the door, the borrower must pay the difference between the buying price and the principal at the time of settlement.

In Danielle’s case at that particular point of time she owed the lender approximately $127,000. But the market value of the property was $125,000 – that is if a buyer was available. If not it might be sold off for something less than that. In a short sale the lender asks for an appraisal of the property and proof of the hardship of the borrower before agreeing to it. Although the sellers lose equity they are not stuck forever with the stigma of foreclosure, which will be a black spot on their credit rating. Late payments however will still be reported. Income tax liabilities cannot be avoided. Banks consider the cancelled debt to be income. However the Congress is thinking over waiving this clause.

Real-estate agents are advising that sellers should seek the way out of foreclosures by short sales. Banks are strongly echoing and supporting these views. Some lenders might give the option of refinancing the mortgage and settle for a lower interest rate. This has made many optimistic that the number of short sales will now increase.

In some states real estates are nose-diving while unemployment is on the rise. It leaves owners unable to sell and repay debts. The numbers of defaulters are likely to rise especially in the case of those who have gone for floating interest rates that rise and fall. The situation is desperate.

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Located in Brittany Chase complex, home features two bedrooms and 2.5 baths. Large master bedroom has beautiful tray ceiling with walk-in closet and master bath with tub and shower stall; second bedroom has it’s own full bathroom. Family/dining room has cozy gas fireplace. Security system ready to activate. Club house includes in-ground pool, tennis court and exercise room. Move-in condition; home kept very well, must see!

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Beautiful 4 Bedroom, 2.5 Bath Colonial on Large Corner Lot! Eat-In Kitchen with Ceramic Tile and Stainless Appliances. Brand New Carpet and Hardwood Flooring. 2005 Central Air and Furnace. Professional Landscaping, Perfect Family Neighborhood within Walking Distance to Schools! Please Call 973-686-1500 for Appointment~4 Hours Notice. Small Children~No Shows after 8 PM, Cont. Upon Owners Finding a Home. Built in 1962. 1 Car Built-In Garage with Garage Door Opener. 2 Car Width Blacktop Drive. Corner .34 Acre Lot. Exterior: Yellow, Aluminum Siding. Exterior Features: Curbs, Patio, Underground Lawn Sprinkler, Storage Shed and Thermal Windows/Doors. Level 1: Dining Room, Family Room, Foyer, Kitchen, Laundry Room, Living Room, Powder Room. Level 2: 4 or More Bedrooms, Main Bath, Other Baths.Flooring: Carpeting, Ceramic Tile, Wood. Interior: Blinds, Security System, Smoke Detector. Appliances: Carbon Monoxide Detector, Dishwasher, Dryer, Microwave Oven, Range/Oven-Gas, Sump Pump, Washer. Excluded: Refrigerator, Swing Set, Personal Possessions. Master Bath: Stall Shower. Formal Dining Room. Eat-In Kitchen. Heat: 1 Unit, Forced Hot Air. Cool: 1 Unit, Central Air. Public Sewer. Services: Cable TV, Garbage Included. Public Water. Fuel: Gas-Natural.

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