Michigan Mortgage Defaults on Record Pace in Oakland County
More than 7,000 Oakland County homeowners could lose their homes to foreclosure by the end of the year, the highest level ever, while housing values on average are flat to falling because of it.
The county recorded 585 Michigan mortgage foreclosures in May for a total so far this year of 2,946 and a five-month pace that could mean 7,070 foreclosures by the end of the year.
The county recorded 4,881 foreclosures last year.
“These are properties that are hitting the market and dragging down [Michigan housing prices],” said Oakland County Equalization Manager Dave Hieber, the county assessor. “As long as this trend continues, I’d be surprised to see an increase in prices.”
Earlier studies indicate prices this year will range from flat to falling 6 to 8 percent depending on the community, he said. Building permits have fallen 50 percent in the past two years.
“The decline in market value will probably result in us having the worst year we’ve had in 30 years in value growth,” said Deputy Oakland County Executive Robert Daddow.
The county has hired an additional housing counselor and launched a series of home retention seminars called “My Home, My Future,” to help home mortgage borrowers facing foreclosure.
The foreclosures have ripple effects across the county’s economy: Governments rely on property taxes to operate. As values decline, tax revenues also stagnate.
The county estimates that 36 percent of properties this year had the same taxable and assessed values. It estimates that percentage will rise to 50 percent next year. Assessed values represent Michigan housing market prices, while taxable values are the result of Proposal A of 1994 that limited tax increases to 5 percent or the rate of inflation, whichever is less.
If assessed values fall far enough, taxable values and taxes fall, too. Good news for homeowners planning to stick around. Bad news for governments.
“Foreclosures really affect the community,” said Karry Rieth, the county manager of Community and Home Improvement.
“Houses are being vandalized, stripped of siding and metals,” Rieth said. “It impacts code enforcement at the local community. It’s also costing the mortgage companies and banks. They don’t want this glut of housing on their rolls. We lose property taxes in the interim.”
The home retention seminars focus on communities where foreclosures are highest but counseling is available for anyone facing mortgage default.
The seminars and counseling are offered to help homeowners manage their debts, perhaps refinance or make arrangements with their lenders, and point them to agencies that can assist.
“We’re trying to do frontline triage,” Rieth said. “We’re trying to help the best we can.”
SOURCE: The Oakland Press