You might think the evaporation of high-interest home loans is good news for a region where thousands of people have lost their homes to foreclosure.
But the timing could not be worse, Cuyahoga County Treasurer Jim Rokakis says.
High-interest mortgages are often the only option for people who are rebuilding their credit. If the supply disappears when many homes in the Northeast Ohio housing market are vacant and begging for owners, it might cause a glut and depress values for years.
“Look out below,” he said. “It’s going to get ugly.”
Tighter credit will further weaken the housing market, said Brian Mikelbank, director of the Center for Housing Policy and Research at Cleveland State University. So will new housing. And the faster handling of foreclosures in Cuyahoga County Common Pleas Court will dump even more houses on the market.
The court has reduced its foreclosure backlog by 16 percent - from 13,155 cases to 11,066 - in under 10 months, records show. Older suburbs demanded swifter action because many owners were abandoning their homes in the face of lawsuits.
But Mikelbank said pain in the near future will eventually give way to gain.
“I think the longer-term impact of the collapse is that lenders are going to have to be much more careful in their lending practices,” he wrote in an e-mail. “That will likely mean fewer households getting mortgages (or households qualifying for smaller [home mortgages]), but hopefully that translates to fewer having to give up their homes down the line.”
Home buyers with good credit would be likely to have the means to maintain the homes, but doing so is out of reach for people strapped by high-interest loan payments.
Critics, including Rokakis, say subprime lenders have fed Northeast Ohio’s foreclosure epidemic by locking people into deals they don’t need or can’t afford.
A new study of foreclosures in Shaker Heights found that high-interest loans, largely for home mortgage refinancing, fueled foreclosures in lower-income neighborhoods.
Now that cities are mired in this high-interest mortgage mess, they have no easy way out. Whether the supply of high-interest credit rises or falls, the result is likely to be an increase in the number of vacant and deteriorated houses.
In many cases, cities will be faced with a choice: fix them up or tear them down.
Some suburbs have already stepped in to fix the houses. Shaker Heights plans to borrow $500,000 this year to repair 40 exteriors. The money must be repaid before the property is sold.
SOURCE: The Cleveland Plan Dealer
Posted by Jed Moss on Mar 22 2007 under Ohio
Most metro-areas in the nation are seeing the overvaluation of houses curb - but prices in the Columbus housing market are below what they should be, a quarterly study asserts.
The Global Insight/National City Housing Valuation Analysis showed that of the four Ohio cities surveyed, the average price for existing single-family homes in Cleveland was overvalued, while price tags in Dayton, Cincinnati and Columbus saw an increase undervaluation.
A survey of the 2006 fourth quarter - October through December - showed the average housing price in Columbus remained the same as in the previous quarter at $153,900, but went from being undervalued by 1.2 percent to 2.1 percent.
During 2005’s fourth quarter, the sale price for houses in Central Ohio was on target at an average of $152,300.
The study was conducted by Waltham, Mass.-based Global Insight Inc. and Cleveland-based National City Corp. The methodology used several factors to determine an appropriate price level for homes in 317 real estate markets across the United States, including the markets’ housing density, average household income, desirability and prevailing mortgage rates to determine if buyers could afford to pay more and keep their monthly payments the same.
The trend of overvaluation of houses nationwide dipped to 16 percent for the period from 17 percent during the third quarter. The largest declines were recorded in California, Florida and the New York housing market.
Results for other Ohio cities were:
- Cincinnati’s average house price was $144,700, undervalued by 3.5 percent, making this an ideal region in which to apply for an Ohio mortgage.
- The average house price in Dayton was $125,300, undervalued by 0.9 percent.
- Cleveland’s average house price was $148,100, overvalued by 2.4 percent.
At the top of the study’s overvalued list was Naples, Florida housing market, which was overvalued by 79.9 percent, while New Orleans was at the bottom of the list with the average price of houses undervalued by 38 percent.
Posted by Jed Moss on Mar 20 2007 under Ohio
Foreclosure filings in Cuyahoga County, Ohio., continue to rise and now top 60 a day, on average, the Cleveland Plain Dealer reports.
The flood of Ohio mortgage problems is overwhelming the resources available to help local borrowers, such as the county’s innovative prevention program designed to stave off foreclosures.
The program, Don’t Borrow Trouble, has achieved success since its inception - but can only do so much against a tidal wave of Ohio home loan woes.
Ohio has the worst foreclosure rate of all states. Current projections show the crisis worsening in the coming months.
Wisely, state officials are stepping in to help find and implement a more aggressive, comprehensive solution to mounting mortgage defaults.
On Wednesday, Gov. Ted Strickland formed a task force coordinated by the Ohio Departments of Development and Commerce and the Ohio Housing Finance Agency to devise an intervention program.
Its job is to improve foreclosure prevention methods across the state of Ohio and help people in deep trouble with their home loans.
The Foreclosure Prevention Task Force, led by Commerce Director Kim Zurz, will include representatives of state and local governments, non-profit organization, home loan lenders and other private-sector entities.
The group is to devise better strategies to help borrowers at risk of foreclosure stay in their homes. It is to create a rescue fund through the Ohio Housing Finance Agency, which offers affordable housing programs by issuing bonds.
Within three weeks, that agency is to have a mortgage refinancing program ready for homeowners with low to moderate incomes who have been steered into loans that put them on a collision course with foreclosure.
The fund probably will feature below-market, fixed mortgage rates.
To help seed the $100 million rescue fund, which eventually could grow as high as $500 million, the agency will attempt to find more private-sector sources of capital.
The task force will aim to negotiate concessions from Ohio mortgage broker groups and other loan financiers on behalf of distressed borrowers; erect a safety net for those who cannot stay in their homes despite the intervention measures; and support a more strict monitoring of mortgage investment businesses.
While there’s a long way to go before the foreclosure needs are met, it’s a step in the right direction for officials who sincerely hope coordination quickens the process and lessens some pain.
SOURCE: Cleveland Plain Dealer
No carpet. No kitchen. No problem.
Those sort of defects don’t scare away Toledo real estate investor Matt Dewood when he finds a house in a popular area where he knows he can turn a nice profit by giving the place a facelift.
With foreclosures soaring across northwest Ohio and southeast Michigan, the 30-year-old investor who specializes in flipping houses has plenty of prospects - and not just ramshackle places in older areas of Toledo.
“There’s a ton of opportunities out there,” said Mr. Dewood, of One Way Properties in downtown Toledo.
He and other pros offer advice to prospective buyers on how to find and snag foreclosed homes, known as REOs, or real estate owned by the lender.
But first, the experts dispelled a myth.
Sheriff’s auctions of foreclosed properties aren’t the happy hunting grounds many would-be buyers believe. Odds are good that the successful bidder in the Toledo area will be the bank or other lender holding the Ohio mortgage on the property.
To protect their interest, lenders typically submit opening bids for the loan balance. Home values didn’t rise in this region as much as they did in some other areas of the nation during the long housing boom.
Rod Culler, a Toledo real estate agent specializing in foreclosed properties, urges getting professional inspections.
Therefore, unless the homeowner has built up significant equity, these properties seldom represent the kind of deals auction participants are seeking.
Mortgage-holders get subsequent sales proceeds before other creditors.
Although there are exceptions to this rule (such as abandoned properties sold for delinquent taxes), the greatest opportunity for prospective individual buyers begins after the lender has taken deed to the property and put it up for sale.
For example, a newer McMansion in Lucas county - four bedrooms, five baths, nearly 5,000 square feet - in the upscale Country Walk development in Sylvania Township was appraised at $575,000 for a sheriff’s sale a year ago.
It was acquired by the lender and was resold seven months later for $315,000, or $260,000 below the appraisal, according to the Lucas County auditor’s office.
Click here to read the rest of this article from The Toledo Blade.
Posted by Jed Moss on Mar 07 2007 under Ohio
Community and business leaders addressed commercial and residential real estate agents Thursday morning about issues affecting the state of real estate in the Dayton housing market.
Speakers at the annual State of Real Estate in the Miami Valley discussed development, educational and government initiatives - including the jobs slated to come here from the Base Realignment and Closure Process of 2005, as well as down payment assistance programs - and their impact on the community. More than 200 people attended the event, held at the Dayton Area Board of Realtors.
“We wanted to demonstrate to them that while there are challenges, these challenges have opportunities,” said Bruce Pearson, president of the National Association of Industrial and Office Properties and moderator of the speakers. “This region is really well positioned to take advantage of those opportunities.”
The speakers were: Georgiana Nye, president of the Dayton Area Board of Realtors; J.P. Nauseef, president and chief executive officer of the Dayton Development Coalition; Dan Foley, Montgomery County commissioner; Colin Campbell, Realtor; Rick Perales, Greene County Commissioner and University of Dayton campus planning director; and Tom Raga, senior director of regional strategy and development for Sinclair Community College.
While the region will benefit from the 1,100 direct jobs slated to come here from the BRAC process, it also faces challenges. Montgomery County has decided to increase the property transfer fee from 10 cents for every $100 to 30 cents for every $100, a move that is not well received by most real estate agents.
But Dan Foley, Montgomery County commissioner, said it was a necessary move to help slow the decline of the general fund’s revenue. In the past five years, the fund has remained flat or decreased. This year it’s about $150 million.
Campbell said the Dayton region has experienced hardships due to the sluggish housing market. But he emphasized that the housing market has seen harder times than these: In 1980, home mortgage rates were up to 17 percent.
“Our problems today are minor compared to in the past,” Campbell said.
He said he expects home prices to increase and inventory to decline, which will soon stabilize the market.
Perales discussed the University of Dayton’s plans for construction on its recently acquired NCR Corp. property. He talked about building an arts facility and academic building, as well as incorporating green space and parking areas. All of this, he said, will be a boon for Montgomery County and Ohio mortgage seekers in the area.
Raga talked about how Sinclair Community College is an asset to the region, enrolling more than 20,000 students each year. He talked about the additional campus the college is opening in Warren County, and how the Dayton campus will be untouched in spite of the new development.
Nye said the session was well received by real estate agents.
“Obviously this has the benefit of letting you know what’s going on in the area,” Nye said.
Posted by Jed Moss on Mar 02 2007 under Ohio
In the Cincinnati housing market, two local organizations are offering an incentive to boost the city’s traditionally low home-ownership rate.
The city has as goal to enable those from lower income levels to take out Ohio mortgage loans; therefore, along with local Realtors and the Home Ownership Center of Greater Cincinnati, it is offering a $1,000 down payment grant to first-time home buyers purchasing a house inside city limits, regardless of income.
Potential buyers must take a nine-hour class at the Home Ownership Center in order to qualify for the grant, and must be represented in their home search by a member of the Cincinnati Area Board of Realtors.
This is not the only way the state is aiming to help borrowers. It has set aside $1 million to assist with late mortgage payments, as well.
“We are trying to spread awareness to the many renters out there who aren’t aware that they could very likely be homeowners at many places throughout the city,” said Gene Snavley, executive vice president of the CABR.
The program will be unveiled at the Homebuyer Fair, taking place March 3 at the Jordan Crossing development in Bond Hill. After that, an increased numbers of residents ought to be considering a variety of home mortgages with the costs slightly reduced.
The Cincinnati Area Board of Realtors represents about 5,000 commercial and residential real estate agents in the area. The Home Ownership Center is a nonprofit group that helps people prepare for, buy and maintain their homes.
Posted by Jed Moss on Feb 20 2007 under Ohio
A 140-mile stretch of Interstate 71 separates one of America’s best cities for black families and the worst, according to a study by BET.com.
The electronic media and entertainment operation, which regularly examines cities for their accommodations for blacks, ranked the Columbus housing market the second-best community in the nation in its most recent study.
It was tied with Washington, D.C.
Atop the roster of locations for African-Americans considering a mortgage loan was Charlotte, N.C. At the bottom of the list of 22 cities was Cleveland, followed by Detroit and Milwaukee, Wis.
In its report Friday, BET.com said Columbus drew praise - and recommended an Ohio mortgage - for its reasonable cost of living, diverse neighborhoods, low crime rate and the $34,000 median annual income among black households.
It said nearly a fifth of blacks in the city held bachelor’s degrees or higher and just 16 percent of blacks 25 and older lacked a high school diploma, making it an attractive destination for well-educated blacks.
About a quarter of the city’s 700,000 residents is black.
In its 2001 survey, BET.com picked Columbus first in the nation for black families.
Meanwhile, Cleveland was panned largely for its troubled economy and schools. The city, with blacks making up nearly 54 percent of its 415,000 population, enjoys a comfortable cost of living that is at the national median, but exhibits a high jobless rate and anemic median income for blacks at $24,500. Hence, why the study did NOT recommend taking out any home loans there.
Also, the violent crime rate is twice the national norm, the report said, and the city is plagued by poverty.
Like Cleveland, Milwaukee and the Detroit housing market dropped to the bottom of the list primarily on economic factors.
Posted by Jed Moss on Feb 16 2007 under Ohio
After five straight years of record home sales, the sizzling sales pace for the Ohio housing market ended last year.
As reported by The Cincinnati Enquirer, Tom Steele takes over this year as president of the Cincinnati Area Board of Realtors, a real estate trade group with more than 5,000 members.
A Cincinnati native, Steele, 47, is the owner and mortgage broker of Steele Realtors in Montgomery. He spoke recently with staff writer Jeff McKinney.
What major factors led to the drop in home sales in 2006?
Sales started to drop in March, and for the most part, that started a downward trend for most of the year. Sellers found they could not get the appreciation they benefited from the previous five years. There also were more homes available for sale than there were buyers for those homes.
Move-up buyers who could not sell existing homes and did not have enough home equity to buy newer property were the most drastically affected by the market reality because they had to stay put. In previous years, those move-up buyers were able to sell existing homes at higher prices and use the equity to buy higher-priced homes.
National media reports of a down housing market also kept potential buyers from getting into the market.
The number of homes for sale in Southwest Ohio, which accounts for about 80 percent of the region’s sales, was 14 percent higher in December than in December 2005, based on the most recent figures available. When do you expect to see the high inventory levels start to drop?
There are indicators that we’re starting to see it already. The number of homes available for sale drooped to 14 percent in December from 29 percent in May. That decline is hopefully an indicator of the market adjusting to the number of [Ohio mortgage applicants] in the market. Good houses priced right are still selling quickly.
What advice would you give sellers and buyers now?
Sellers need to make sure their homes are priced right based on today’s market and not the market six months to 12 months ago. They need to work with a Realtor who can give them an objective view of what they can reasonably expect to get to for their home.
They need to understand that buyers have a huge inventory to choose from, so they should make sure their homes is in excellent condition before listing.
For buyers, anyone who has not jumped into the market should do it now because there are plenty of homes to choose from, mortgage rates are good, and you may be able to negotiate a better deal.
Posted by Jed Moss on Feb 12 2007 under Ohio
The Columbus Housing Partnership said Friday the Ohio Department of Development has made $1 million available in Ohio Home Rescue Funds to prevent foreclosures in the state.
Loans are available on a first-come-first-served basis through the Columbus Housing Partnership, along with 11 other nonprofit agencies participating in the Ohio Foreclosure Prevention Initiative.
With Ohio reporting the eighth-highest foreclosure rate in the nation for 2006, educating homeowners about preventing foreclosure and helping those that are already in mortgage default is a top priority for the state, Columbus Mayor Michael B. Coleman said at a press conference.
Columbus, Dayton and Cleveland were among the top 20 largest cities in the nation for foreclosures last year. Hence, the basis for proposed legislation to help protect Ohio mortgage holders.
The Columbus housing market ranked 19th on the list with one house in foreclosure for every 45 households. It fared better than Cleveland, which was in 14th place, and Dayton, which was 15th. Cincinnati was 49th among RealtyTrac Inc.’s survey of foreclosure rates in the 100 largest U.S. cities.
The statewide average was one foreclosure for every 59 households, higher than the national average of one home mortgage loan default filing for every 92 households, RealtyTrac data showed.
“Once again, Ohio is leading the way, but not in a good way this time,” Coleman said.
Assistance through the Ohio Rescue Fund is available to homeowners whose annual income is less than 65 percent of the area’s median income. That averages out to about $42,000 a year for a family of four, the Columbus Housing Partnership said.
Those who are deemed eligible for assistance are required to take 10 hours of financial fitness classes to understand how to build credit scores and create a budget.
However, homeowners from all walks of life are eligible for free foreclosure prevention education offered at the Columbus Housing Partnership, the organization’s CEO Amy D. Klaben said.
“Foreclosure affects people from all neighborhoods and incomes,” she said.
Its hard to say how long the $1 million in funding from the Department of Development will last, Klaben said. Families typically need about $3,000 to help them make up for missed mortgage loan payments.
The funds will probably help about 350 homeowners in Ohio, Klaben said.
Last year, the Columbus Housing Partnership distributed $120,000 in loans helping 62 homeowners escape home loan delinquency.
Posted by Jed Moss on Feb 10 2007 under Ohio
Why has the word crisis so often been used in connection with the Ohio housing market?
It’s a sad reality, with nation-leading foreclosure rates, along with stories of rampant consumer fraud, grabbing the headlines across the region. Sadly, these are justthe tip of a very large, financially dangerous iceberg.
As the Ohio legislature saw the situation, these were mere symptoms of rampant systemic problems that required extensive legislation to fix. Therefore, last year the legislature passed and former Gov. Taft signed Senate Bill 185, affecting virtually the entire residential mortgage lending industry.
The law became effective Jan. 1.
S.B. 185 is sweeping in its scope. It is designed to remedy numerous abuses consumers endure at several different stages in mortgage lending transactions, as well as to close an information gap suffered by consumers unfamiliar with complex lending and home purchase loan closing processes.
Consumer protection
This piece of legislation has been most often portrayed as consumer protection legislation, and by including residential real estate transactions within the coverage of the Consumer Sales Protection Act, it rings valid
The act, Ohio’s primary consumer protection law, in many circumstances gives aggrieved consumers the right to recover triple damages and attorney fees from those who violate the law. It provides good incentives for businesses to “play nice” with their customers.
The act also imposes many new obligations on mortgage brokers, real estate appraisers and the title insurance industry. Previous legislation required mortgage brokers and loan officers to be licensed by the Ohio Department of Commerce.
The new law goes further by requiring national criminal background checks of all applicants, and prohibiting licensure of those with a history of involvement in various criminal acts, such as theft, fraud, embezzlement and a host of other misdeeds.
In addition, operations managers of brokers now have to undergo extensive education covering lending laws, the consumer protection act, ethical responsibilities and other topics. In a direct attack on a widespread problem, home mortgage brokers must now give customers expanded disclosure statements.
In addition to disclosing fees to be paid by the customer to the broker and others, borrowers of loans exceeding 90 percent of the home’s value are now told that they may be unable to refinance home loans and upon sale, may owe more than they receive.
In hearings on the act, the legislature heard stories about unscrupulous acts in connection with real estate appraisals. The new law prohibits appraisals of real estate for mortgage loan purposes by persons not certified or licensed by the state.
Title insurance agents have also been targeted by the new law. Often the only people borrowers see face to face during the borrowing process, title agents are now required to provide several new disclosures to borrowers.
The new law also makes available to sellers, mortgage lenders and buyers/borrowers closing settlement protection, basically indemnification by the title agent against its theft, misappropriation, fraud or failure to disburse settlement funds properly.
Also, the commerce and insurance departments have proposed a series of regulations to fill in the details of SB 185. The new rules will address such issues as factors that should be considered in determining a borrower’s ability to repay a loan and whether a refinance transaction provides a tangible net benefit to the consumer.
Posted by Jed Moss on Feb 05 2007 under Ohio
