MAHONING VALLEY Foreclosure numbers soar

By CYNTHIA VINARSKY
VINDICATOR BUSINESS WRITER
WARREN -- Sad stories are part of Sophia Rintala's routine as coordinator of home foreclosure sales for the Trumbull County Sheriff.
Around Christmastime, the stories get sadder.
Foreclosures are up dramatically in Trumbull County, and Rintala's workdays are so hectic that she usually manages to stay detached.
But sometimes a tearful mother or a distraught senior citizen reminds her of the human side of foreclosure. They call after the homes they own or rent are sold in a sheriff's sale, pleading for more time so they won't have to move out.
"Around this time of year, it's difficult," she said. "They tell you their whole story and your heart goes out to them. It makes you realize it could happen to any one of us."
More than 11,000 homes and rental properties have been sold in foreclosure sales over the past five years in Mahoning, Trumbull and Columbiana counties. All three counties have seen their yearly totals more than double over that period.
Ohio, national figures
Ohio's foreclosure rate has shown comparable increases in five years. Data compiled by the Mortgage Bankers Association show 2.7 percent of all Ohio mortgages issued were in foreclosure in the third quarter of this year, more than double the 1.25 percent rate of the fourth quarter of 1999.
Nationally, the rate has been much lower and more consistent, averaging between 0.21 percent and 0.37 percent of all outstanding loans over the past five years.
Officials who work with foreclosures in the three-county area agree that job loss is probably the biggest factor in the Valley's high rate of mortgage default.
"We've had so many layoffs and plant closings in our area," said Nancy Gray, northeast regional director of Consumer Credit Counseling Service, with offices in Youngstown, Boardman and Warren.
"In most cases people don't sit around when they lose their job; they go out and find something else, but often they find themselves underemployed. They're not making enough to pay the bills, and they get behind."
Tony Dattilio, clerk of courts in Columbiana County, said job loss is definitely to blame for most foreclosures there. "They say the economic indicators are up, but we've had some big job losses locally," he said.
Other catastrophic events
Other life changes, such as divorce, high medical bills, or the death of a spouse, can also leave families unable to pay the bills.
"When there's no preplanning, a job loss or a catastrophic illness can be disastrous," Gray said. "That's why it's important to have some money put away to cover expenses for six months."
Loan refinancing and home equity loans are factors too, said Kathi McNabb Welsh, chief deputy clerk of courts in Mahoning County. What starts as an effort to save money with a new, lower interest rate can turn to trouble when the homeowner starts rolling in credit card debt and adding cash for major home improvements.
"There's no question that these are tough economic times," she said, "but we also see people overextending themselves when they refinance and take out home equity loans. They don't read the documents as carefully as they should, and then they find themselves in trouble."
Unscrupulous practices
Sometimes predatory or fraudulent lending practices come into play, said Jason Earnhart, an assistant Trumbull County prosecutor who deals with tax foreclosures.
He's noticed that a large percentage of high-interest, no-money-down loans end up in foreclosure. They're often the only kind of loan available to people with poor credit.
"Some of these borrowers shouldn't have been given a loan at all," Earnhart said. "The lenders do it anyway because enough people are willing to pay the interest rate, so it's worth their while."
Foreclosures affect homeowners at all income levels.
In Mahoning County, for example, a Dec. 9 foreclosure sale included two homes appraised at more than $200,000 and one appraised at $18,000.
The 33 remaining homes up for sale ranged in value from $19,000 to $90,000, said Mary Pat Gilboy, a supervisory secretary in the Mahoning County Sheriff's Department.
She said most Mahoning foreclosures involve properties in Youngstown, but suburban properties also show up regularly.
Rintala in Trumbull County agreed that her foreclosure list includes properties from every part of the county and ranging widely in appraised value, sometimes as high as $300,000.
In most cases, Rintala and Gilboy said, the lenders are from out of the area.
Bankruptcy misconceptions
Some people believe that filing for bankruptcy protection protects a homeowner from foreclosure, but Earnhart said that's a misconception.
A consumer who files a bankruptcy petition after his or her property is in foreclosure will temporarily stop the sale of the property.
The mortgage holder may prevent the sale if he files a Chapter 13, Earnhart said, as long as he can demonstrate a plan for catching up on both mortgage and property taxes. Chapter 13 allows a debtor to repay debts, usually in three to five years.
A Chapter 7 filing, however, will only delay the sale. In a Chapter 7 the debtor's assets are liquidated to pay off debts.
Labor-intensive process
Foreclosures are labor-intensive for the courts and for attorneys representing delinquent mortgage holders.
Once a case is filed, court personnel must do title searches to discover who else has interest in the property and all are listed as defendants who have the right to have their claim litigated. Filing paperwork with all those defendants can be time-consuming, said Welsh, the Mahoning County chief deputy clerk of courts.
Appraisal teams working for the county must appraise the properties, usually setting the price close to what the house would sell for on the open market.
Foreclosure properties are auctioned once a month in Trumbull County, usually about 50 at a time; in Mahoning the auctions are held every other Tuesday and average 36 properties per sale.
Bankers and loan companies buy most foreclosed properties and then resell them, Rintala said, but prospective home buyers and investors looking for a bargain occasionally show up for the auctions too. By law a property can't be sold for less than two-thirds of its appraised value, so that's where bidding begins.
Don't ignore notices
When a mortgage holder misses payments, the lender usually starts sending notices and reminders, said Gray of Consumer Credit Counseling. If the lender gets no response after several tries, it starts a foreclosure action.
"The bottom line is, the mortgage company does not want your house. They want the payments as agreed," Gray said. "If you talk to the lender soon enough, you might be able to work something out, but if that mortgage is five or six months in arrears, it may be too late."
Sometimes the answer is to sell the house before the borrower gets too far behind. If the homeowner's income drops, whatever the reason, the mortgage may no longer be affordable.
Most local lenders will "bend over backward" to help mortgage holders who are having trouble paying, Gray said.
Working with lenders outside the area can be more difficult, but it's just as essential to contact them and try to work out a solution. "Remember," she said, "it's an advantage if you're calling them, much better than if they're calling you."
vinarsky@vindy.com