Michigan is struggling caught between the double pincers of unemployment and foreclosures. It has the highest unemployment rate from 2006. The predictions are that in June it will spike to 15.2% and keep on going up before finally taking an about turn. The state has never quite recovered after the 2001 recession.
The collapse of the auto industry has had an indirect effect on other sectors. Michael Van Fossen of Lansing once had an income of $50,000 per annum with additional benefits as a surveyor of land. He is now browsing through job advertisements for opening in other sectors as well as finishing his degree in business administration. There was a time when there was hectic activity while subdivisions were being built. Fossen could not handle all the work rolling in. But in just one year he got laid off from two surveying jobs. His wife looks after a modest business dealing with grooming of pets but with the economy being tight the people are not much concerned about sprucing up their house pets. Although their two small children are covered by Medicaid the couple is not covered. In November his employment comes to a close.

To fight the battle against unemployment the administration in Michigan is actively following the policy of giving encouragement to industries dealing with “green” technology. The state boasts of a highly skilled working group. Generous tax breaks are being offered together with other incentives.
The plans have met with partial success. Johnson Controls-Saft Advanced Power Solutions has opened a plant for assembling batteries in western part of Michigan. General Electric has come forward to invest $100 billion for the development of software and manufacturing of units connected with renewable energy like gas operated turbines and the like.

Michigan is also focusing on diversifying its economy from manufacturing to promoting tourism and giving attention to its agricultural products, health schemes, printing and innovations in pharmacology.

But any return to prosperity will not happen overnight – it will take time.

Over 450,000 jobs in the manufacturing sector have been lost from the middle of 2000. The hardest hit was the automobile production units. By the end of 2010 General Motors will shut down five of its plants in Michigan. The auto suppliers are in grave trouble. By the end of the 2010 jobs connected with the auto industry will drop to less than 100,000 – this despite the fact that Michigan has been chosen for the production of next set of sub-compact cars of General Motors.

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The fall out from foreclosures affects all and not just the direct players in the game – the lenders and borrows.

In Michigan after exiting from the ministry ten years ago, Greg Sterns became the financial manager of Lighthouse, Oakland County. It is a non-profit body based in Pontiac. His job was to help those who were buying houses for the first time and to give advice to people about managing their budget. He held regular classes, ran meetings and sat down with financial problems of individuals.

The last two years has seen a dramatic change in his work schedule. Stern said, “The primary thing we’re working on is the foreclosure crisis. We’re in the trenches and we’re getting buried.” The situation is particularly grim in Oakland, Macomb and Wayne counties of Michigan.

The hotline of Lighthouse is receiving about 40 calls each day. Each year the workload of Lighthouse has been increasing. In 2006 there were 200 of their clients facing foreclosure. In 2007 the number went up to 400 and it was 800 in 2008.

Looking at the figures there is no doubt that the economy has been hugely impacted upon. Income levels have fallen, as jobs have been lost. To further complicate matters have been health care problems. This situation has accelerated during the last three years. At the root has been the sub-prime crisis that has seen people with exotic mortgages stagger under interest increases. The majority of the Lighthouse clients are those who had got involved in these loans during the last three years. Sterns explained, “Probably 90% to 95% of the individuals we see are with sub-prime mortgages. We knew that was going to happen.”

If the economy of Michigan takes a turn for the worse again Lighthouse will see a further increase in number of clients. A bill if turned into law will however give some relief to the harangued borrowers. One clause would make it mandatory for lenders to allow 90 days grace to the borrowers. This time would allow for talks to be held between both the parties for an amicable settlement. If this did not happen then the judges would have the right to dictate terms. Other clauses would enforce moratoriums running into one to two years for certain types of mortgages, create a loan protection scheme for residential mortgages and also give protection to the tenants by giving them 30 days notice before being asked to leave.

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Innovative artistic touches are transforming the complexion of foreclosed houses and the entire neighbourhood. It is a ray of sunshine in the middle of a decaying automobile industry, increasing unemployment and thousands of foreclosures in Detroit. But Mitch Cope together with his wife Gina is endeavouring to change the scene tackling the houses one by one.

About four years ago the couple had bought a house in the northern parts of Detroit. Since then they have been taking the help of artists from across the globe to buy the foreclosed units in the locality and give it a new touch.

The house of the Copes was a 1920 brick one – a Polish delicatessen. The garage has retained its distinct look of a deli storefront. The house is a mile distant from their own design store. The residents are mostly Polish and Ukrainian with a recent sprinkling of Bangladeshi immigrants.

Mitch Cope remarked, “People who have been in the neighborhood for a long time talk about how great the neighborhood used to be; you didn’t have to lock your doors.” But he did not let the matter rest on a negative note and said, “OK, so it’s gotten worse. … But now what? Let’s do something. Let’s have fun.”

The couple started off in a small way. Tired of looking at the discoloured gray fence across the street they started to paint it a bubblegum pink. Some neighbours also joined in. Next they focused on a foreclosed unit standing a little further on. It was single-family house put up for sale with an asking price of $1,900. The property had been badly vandalized and stripped of any scrap that could be resold – copper wires, plumbing, radiators, electricity lines etc. The decided to convert it into a “Power House Project.” Cope explained, “Our idea — instead of putting it all back and connecting to the grid, we wanted to keep it off the grid and get enough solar and wind turbines and batteries to power this house and power the next-door house.” He is optimistic that it can be done with a budget of $60,000 – an amount that he expects to recover from grants.

Cope has more plans. He wants the first floor of this Power Hose to operate as a local art centre and the second floor as living quarters for the visiting artists. He is confident that once he can tempt the artists to visit the locality they will want to stay on and the cheap property prices will be an added incentive.

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Soon one of the most horrific years in American history and that of the world will draw to a close. Michigan has been one of the worst affected pockets. Foreclosures raged through the state as thousands found themselves unemployed. There were record numbers of bankruptcies. Pundits opine that this was the result of institutionalized greed causing a wider gap between those that have and those that have-not. Such a scenario has not been seen since the Great Depression.

There is fear all around and a feeling of insecurity about tomorrow. Hardly there is anyone who has not been touched by it. No business is immune to recession. Factories are silent, foreclosed houses are crumbling and decaying while pets are dying abandoned on the streets. From those who had retired to college students – all have been badly mauled. There is no piggy bank on the mantlepiece to take care of the rainy day. Savings has dropped to zero. The foreclosure tide took with it even the value of the houses.

Yet hope is there – foreclosures cannot kill its eternal flame. Few weeks ago crowds gathered in thousands in Grand Park at Chicago to celebrate and see in person the first Afro-American to be elected President of America. He spoke of change as well as diversity for a nation in great need of the same. Many openly shed tears as others broke into singing and partying spontaneously. The same scene was being enacted all over the country in rippling infectious waves of hope that foreclosures could not dim.
It will not be long before that hope raises its head again as the young family move into the White House replacing a weary leader who has failed the nation in more ways than one. But nothing will happen overnight. It takes time for spring to bloom. The foreclosure crisis might get worse before it peaks and tapers off. The people must not expect a miracle but keep hope and faith alive as the New Year dawns. Hope is not just a wish and a dream – it is the most powerful emotion that fires the engine of civilization.

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Sandra Applleberry of Grand Blanc is 53 years and is a pastor of a church in Flint. She is one of the thousands who are threatened by impending foreclosures as they are behind in their mortgage payments. This tense situation has caused the three senators of the state to support a bill that will put a hold on mortgage as well as tax foreclosures in Michigan.

The legislation would permit foreclosure victims a respite for two years according to court orders. The time could be worked out to reduce the amount of monthly payment. During the first quarter of 2008 there were 1,734 foreclosure postings in Genesee County according to the findings of RealtyTrac. It is the same as the last quarter of 2007 and an increase of 47% from the first quarter of the previous year, 2007. Michigan as well as Genesee County has been attacked simultaneously by foreclosures and high unemployment rates. Senator John Gleason (D-Flushing) sees this problem as exasperating. “It’s not ending. It’s getting worse.”

The situation began to get problematic for Appleberry from the fall of 2007 when her mortgage monthly amount suddenly zoomed to $1,700. Just at that time she had lost the allowance she got from housing. Her husband, Leslie is disabled and received payments from social security.

The ACORN branch of Flint mediated to stop an auction of the house of the Appleberry’s some month’s ago and is now pursuing the matter with the lender to bring down the interest rate to 9.5%. Sandra is optimistic that some sort of agreement will be reached – something that they can afford. Hitherto a proposal by the lender had been well beyond their means.

The legislation will also permit the owners of houses to ask for a freeze on property tax for two years. The plan allows Michigan State Housing Development Authority to issue bonds that would ensure mortgage guarantee during the time of the freeze. The money from the bonds would be utilized to help foreclosure victims about to lose their houses.
In the past a tax postponement plans had helped many out of tax foreclosures. In six years 1,700 families have benefited. ACORN hopes to utilize a $7.8 million grant to help more families threatened with foreclosures.

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In investigation of Michigan foreclosures for sale, there are listing services providing the potential investor with the most up to date information pertaining to properties that have been foreclosed on, or are about to be foreclosed on. The origin of this kind of service stems from those who conducted courthouse research for title search companies or attorneys. These listings were used by professionals in the industry and from this it was determined that there was a need for this information. Courthouse research companies have since expanded their services and are able to make this data available to consumers in the form of investors, and other bargain seekers in the property market.

Organizations that deliver accurate information in the form of Michigan foreclosures for sale listing services, fully understand the foreclosure process. They know the kind of information required by their customers and the opportunities that are available.

It is advisable to ensure that any listing service used has a good reputation, there are some services listing Michigan foreclosures for sale who pay very little attention to detail, do the least amount of research and make false claims. It is very possible to become financially independent by investing in real estate, however not in the way that some listing services suggest. Beware of telemarketers who make statements that appear too good to be true, they usually are.

The realities are that the real estate industry is not what it was a few years ago. The economy is in an upswing, and Michigan foreclosures for sale on the books of bank are no longer so prolific. Banks and Government owned properties are no longer being given away at a song. Bank owned Michigan foreclosures for sale are still available but these days lenders are often selling properties at more market related prices and making a profit on them. There are however opportunities available to investors who are willing to learn the process of buying and selling foreclosure properties.

Some incredibly absurd claims have been made by Michigan foreclosures for sale listing companies, here are just two of these absurdities:

* All foreclosure properties on our listing sells for 60% discount on market value. Bank owned properties sell for market price or at discounted values, the average discount on REO properties is less than with any other method of investing in real estate. For instance buy in pre-foreclosure and at auction, if the investor knows what they are doing, makes more profit.
* Our listing company is networked with more than 4 000 banks. There is no national network of banks or lenders who list their real estate assets, and at last count, nothing like 4 000 banks. If this were the case all foreclosure listings would be identical. Every listing service contains different foreclosures for sale and these are generally regional.

It is for these reasons that the investor needs to ensure they are in possession of a reliable Michigan foreclosures for sale listing service.

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To many these are just numbers and figures read over breakfast prior to rushing off to work. Mortgage dues continue to be paid while gas and food bills are denting into the income. This will mean a dinner or two will be skipped. But taking all things into account the American of today is better than what he or she suffered during the last recession that came to a close towards the end of 2001.

But that is only side of the picture. But for many statistics are a reality. They have lost jobs and are losing out to foreclosures. Rising food and fuel prices have made them give up the last hope of being able to keep the houses that are their homes. These unfortunate Americans are far worse than what they were seven years ago.

Looking at the two pictures can it be said that on an average Americans are better off? It is one of the crucial questions before the presidential candidates McCain and Obama. It is a question they are asking the voters to mull over.

There is no definite answer. Economists will throw the ball from one court to another without hitting the goal. For most the answer lies in the personal situation. CNN will be conducting a survey finding out of the hopes and fears of the ordinary citizen coming from all walks of life. To begin with CNN has asked individuals to submit photos and video clippings. Meanwhile the individual can go ahead with personal assessment against the background of the foreclosure crisis.

The first thing is employment – the foundation of economic health is the job or work. So the question to note is whether one is employed, threatened or unemployed with slim prospect of getting another proper job. Across the country unemployment has gone up by 5.7% – the figure of the late 2001.

The next thing is income. The earning figure might be the same but is it bringing in the same amount of goods and services? Perhaps the hours of work have increased or may be the salary has gone down making one work more for less. Nationally the income has not kept pace with inflation.

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It is a year now since the foreclosure crisis has made its presence felt in USA.. The financial institutions have bared their losses but the story has not ended there – the infection is spreading to other types of credit.

The International Monetary Fund is an institution consisting of 185 nations. It stated, “Credit quality across many loan classes has begun to deteriorate with declining house prices and slowing economic growth.”

Till about a year ago the foreclosure crisis was mainly thrashing the borrowers. Slowly foreclosures began to strangle the lenders in the country. They had eaten too much and the huge number of foreclosures led to their suffering from indigestion. But America is a big brother to all countries across the globe. There is a saying that when USA sneezes the others catch a cold. All those who had eaten at the same foreclosure table of woes are now showing symptoms of discomfort and economic ill health. Banks are being pressurized to raise extra capital despite the depletion of huge bank stocks. This has “increased the likelihood of a negative interaction between banking system adjustment and the real economy” according to the latest report from Global Financial Stability.

At a news conference Jaime Caruana of IMF said, “the downside risks outlined in the April GFSR appear to be materializing, leading to a negative feedback loop between the financial system and the broader economy.”

According to IMF calculations the banks and other financial bodies have written off $400 billion in mortgage investments. There is no sign of improvement with innumerable foreclosures waiting to be auctioned and signs that millions more will become delinquent. The call of the hour is to stem the tide of foreclosures in USA. The stumbling of Fannie Mae and Freddie Mac has further eroded confidence.

Banks are tightening credit and selling assets. In the first quarter of this year the private sector borrowing of US dropped by 5.2%. This level has not been recorded since the year of the last recession – 2001.

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The Landlord Association of Saginaw has taken note of the number of people wanting to rent units. Butch Burden, the president of the association, believes that this is natural because “people have to have some place to live.”

However, renters have become very choosy about the place where they want to stay. Most want to stay in the Midland areas, which is on the west side of Saginaw, or in safe, suburban areas. Mike Haman of Haman Property Management says he has rental units in Saginaw Township, Vassar, Carrollton Township and Thomas Township. He has mentioned before that the rental market has picked up recently and that, in future years, it will become even more intense. Things are picking up, as Haman has mentioned, but it will be about a year before rental agents can see their work come to fruition. .

RealtyTrac reported that in Michigan that the number of foreclosures has gone up by about 25% since May. Michigan is now ranked fifth in the country among the states with the highest foreclosure rates. In May, it was in ninth place meaning it went up by about four places. During the month of May, there were about 1,353 foreclosures.

RealtyTrac shows that across the country there were 261,255 foreclosure postings during May alone, marking a 7% rise from April and a huge jump of 48% from May of the previous year. The national foreclosure rate was 1,483 in May – the highest number it has ever reached in a month since RealtyTrac started collecting data from 2005. May was the third consecutive month that saw a month-by-month increase according to James Saccacio CEO of RealtyTrac. In May, default notices increased by 1% and auction sales were down by 3%. But during this month, bank takeover of properties surged ahead marking double digit increases. The numbers have definitely doubled since May 2007. The banks today own about 700,000 properties.

It also shows the huge number of families that have been thrown out of their houses due to the foreclosure process. These families are now rushing to seek rental homes or apartments. Many real estate investors have been finding it profitable to buy houses at discounted prices and convert them into rented units. But with so many houses crowding into the real estate market, the prices of these rental units have been falling as of late. Unfortunately, this has lead many people to become concerned that the prices will fall even further.

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Obama wants the government to play a more leading role than McCain. Both are for the FHA coming forth with more affordable new mortgages for the foreclosure victims. This is the only way the house owners will be able to refinance and shift on to a safer mortgage that will be insured by the government. The monthly payments would also be lowered.

The problem in executing this plan is that the lenders would have to agree to sizeable losses by waiving a chunk of the principal loan. On the positive side by allowing this they will save money by avoiding the costly, time consuming, judicial process of foreclosure. They would avoid the hassle of selling innumerable properties in the buyer’s market of today.

Obama is following the plan laid out by Senator Dodd (D- Conn) and hopes that it will benefit 400,000 foreclosure victims. It will not be required of borrowers to have impeccable credit history to avail of these loans. Obama’s point of argument is that “If the government can bail out investment banks on Wall Street, we extend a hand to folks who are struggling on Main Street.”

If McCain’s plan is executed a minimum of 200,000 to a maximum of 40,000 foreclosure victims will be benefited – they will be able to save their houses. But the help will be available only to those who had credit credibility at the time of taking the original mortgage. McCain comments that this will give every American straddled with a burdensome mortgage to trade it “for a manageable loan that reflects the market value of their home.”

Obama’s plan that is linked with that of Dodd and the FHA will cost about $1 billion. The money would come from the profits made by Fannie Mae and Freddie Mac during the housing boom. McCain’s plan, also linked with the FHA, will need minimum $3 billion to a maximum of $10 billion. This money will be got by diverting spending meant for other heads. Also the government would resort to borrowing.

Neither of the plans speaks of a long-term solution.

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