Nobody Likes Foreclosure in Delaware Ohio …

 One only needs to read the Delaware Gazette’s classifieds and you can tell the increase in homes that are heading to Sherrif Sale.

And foreclosure is bad for everyone involved.

• The Homeowner – not only loses their primary residence but destroys their credit for years.
• The Community – Watch a HUD home go on the market in your neighborhood or a “Short-Sale” and the value of your home has dropped by 3-5 percent.
• The Mortgage Owner – Not always the original company that was involved with the home was originally mortgaged, however the owner has to pay roughly $50,000 in the foreclosure process and they get to own a home in the long-run that they had no interest in owning.
• The Mortgage Industry – From a macroeconomic level the mortgage industry has received a huge black eye from this increase in foreclosures. They’ve seen their ability to sell  mortgages hampered and are now facing governmental scrtutinty. There are numerous companies on a microeconomic level that deserve every black eye and broken bone they receive, but I’m an optimist and I believe that on the whole this industry has good people.

So if it is so bad for everyone, then what should we do about it?

Well the options are not always pretty, but and most of them involve two key things:

1. money for those facing foreclosure
2. censure of those accused of taking advantage of these homeowners.

In Massachusetts Govenor Deval Patrick has asked for a two-month moratorium on foreclosures, according to a recent article in the Boston Herald (found via The Real Estate Blog).

Why is this of interest to those of us in Ohio?

“It is effectively a moratorium on foreclosures in Massachusetts,” said Bruce Marks, whose Jamaica Plain-based nonprofit, Neighborhood Assistance Corp. of America, has a nationwide network of offices. “It is a very big deal. We will bring the Massachusetts standard nationwide.”

Marks is estimating that 1,000 people will file for relief with his group following Patrick’s announcement. The issue here is that it isn’t the best way to handle the situation, unless they can find a way to compensate the businesses that own the loans. Many subprime loans (if we are focussing on that market) are sold within hours of being completed. So this plan is not hurting the original company, rather it is hurting another victim in this process.

And if the rest of the nation doesn’t follow the Mass. lead then it will hurt their ability to attract mortgage providers in the future.

Ohio Senator Sherrod Brown has introcuded a bill in Congress that would provide support for families that are facing foreclosure and help them get refinanced, while also placing mortgage brokers under a new level of scrutiny. They would have to pass an exam that is heavy on the right’s of buyers and ethical issues to be allowed to do business.

“Ohio is faced with one of the highest foreclosure rates in the country, and our cities are being particularly hard hit. Instead of living out the American Dream, thousands of Ohioans are facing a nightmare on Elm Street and Euclid Avenue and East Market Street. Congress must act to provide greater protections for consumers, and this legislation is a necessary first step. No longer should the dreams of Ohioans and homeowners across the country fall victim to the fine print,” Brown said in an interview with The Logan Daily News.

This is a step in the right direction, and hits on one of the key parts of this equation — predatory lending that’s not legally predatory.

How is that possible? I’ll make you wait until tommorrow to find that out. 

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