Report: Many losing homes

Many borrowers owe more than their homes are worth.
By MARC KOVAC
VINDICATOR CORRESPONDENT
COLUMBUS -- Legislation OK'd by state lawmakers last year should thwart unscrupulous lenders from hoisting subprime mortgages on unsuspecting borrowers, but more funding and support is needed to assist homeowners already at risk of foreclosure, an advocacy group said Thursday.
"We're going to need a tremendous amount of money if we're going to be able to remediate any of the suffering that's in the pipeline right now," said Paul Bellamy, co-author of a report released by the Coalition of Homelessness and Housing in Ohio concerning subprime lending and its anticipated effects on foreclosure trends in coming years.
Bellamy and Bill Faith, executive director of the coalition, discussed their analysis of foreclosure trends. They cited a study released earlier in the week by Policy Matters Ohio that showed a 23.6 percent increase in foreclosure filings in Ohio from 2005-06 (to 79,072 from 63,994) and a 395 percent increase from 1995 (15,975 filings).
A total of 78 of the state's 88 counties had an increase, with Cuyahoga (13,610), Franklin (8,875) and Hamilton (5,876) topping the list in terms of filings. Locally:
Valley's statistics
Columbiana County had 558 filings, down 6.8 percent from 2005 but up 116 percent from 1995.
Mahoning County had 1,946 filings, up 15 percent from 2005 and 506 percent from 1995.
Trumbull County had 1,560 filings, up 30.3 percent from 2005 and 514.2 percent from 1995.
In total, Ohio had the highest foreclosure rate in the country, at more than twice the national average. It was second-highest in terms of foreclosures and properties with owners more than 90 days late on payments. Mississippi and Louisiana, both hit hard by Hurricane Katrina, ranked 1 and 3, respectively.
Subprime loans are contributing to the situation, with lenders providing mortgages without verifying a borrower's income, at excessively high debt-to-income ratios (in some cases, it would take 80 percent of an individual's income just to make the monthly payments) and with high prepayment penalties that quickly eat into equity, Bellamy said. Many borrowers stuck in such loans can't refinance, because they owe more than their homes are worth.
The overall results weren't a surprise to anyone following foreclosure trends, Bellamy said. But what was surprising was the impact on different income groups -- nearly 73 percent of subprime mortgages were held by middle- and upper-income brackets, and 31 of 32 counties with the highest percentage of loans were located outside urban centers.
"Foreclosures are no longer an urban problem," Bellamy said. "They've moved to the suburbs, and they've moved right smack dab into the middle class."
What's being done
There have been some positive steps toward addressing the situation, Bellamy and Faith said. Senate Bill 185, passed by the Legislature last year, included some protections for consumers against deceptive mortgage lenders.
A recently announced initiative by the Ohio Housing Finance Authority will pump 500 million into affordable, fixed-rate mortgages for homeowners stuck in high-interest and subprime loans. And some lenders have voiced a willingness to work with homeowners facing increasing mortgage payments under subprime agreements.
But there's still a need for counselors to help residents facing foreclosure and further regulation of the subprime industry, Bellamy said.
"We need more resources," he said. "We need it from the public sector, we need it from the private sector, and we need it from the charitable sector."
mkovac@dixcom.com.