Housing crisis hits hard in Midwest

Nine of the nation’s 10
highest-risk metropolitan areas are in Ohio, Michigan and Indiana.

CHICAGO TRIBUNE

The boxes are still stacked in the garage of the three-bedroom ranch on Milwaukee’s northwest side, a daily reminder that the sheriff could come knocking again and put Tiffany Pointer and her four children out on the street.

Chances are that Pointer, whose home for the past five years was supposed to be on the sheriff’s auction block last week, will escape foreclosure, thanks to some fast and still-in-the-works renegotiating of her mortgage payment, which had nearly tripled in size in two years.

“I was all set to move in to my aunt’s basement,” said Pointer, a single parent whose children range in age from 8 to 17. “It was pretty grim.”

While Pointer and her children are still living out of the boxes, they may be among the lucky ones not to be dragged under by the worst housing crisis since the Great Depression. More than 635,000 foreclosure notices were filed during August, September and October, double the number from the same period last year, according to RealtyTrac Inc., a mortgage data company.

Nevada, California and Florida lead the nation in foreclosures, but the Midwest suffers from the double whammy of a declining housing market and economic performance that lags behind much of the nation.

“Perhaps Cleveland and Ohio aren’t at the top of the list, but that’s like standing on the deck of the Titanic and saying we’re not taking as much water as we did the last hour,” said Mark Wiseman, director of Cuyahoga County’s Foreclosure Prevention Program.

“We’re still getting over a thousand a month in foreclosure filings and sheriff’s sales,” Wiseman said.

A recent report measuring the risk of residential mortgage loan delinquencies found that nine of the nation’s 10 highest-risk metropolitan areas are in Ohio, Michigan and Indiana, according to First American CoreLogic Inc. Those three states also rank among the top six in bankruptcy filings per thousand people in the year ending June 30, according to the Administrative Office of the U.S. Courts. Despite a new federal law making it more difficult to file for bankruptcy, personal filings in Ohio during the second quarter of this year were up 50 percent over the same period last year.

In Milwaukee, Trena Bond sees the risk become reality every day. Bond runs a housing advocacy business that helps people obtain home loans and — most recently — hold onto the ones they have. The crush of foreclosures has doubled her business in six months.

Bond, who is executive director of Housing Resources Inc., said her typical client is a black single parent and a first-time homeowner with an average annual income of $35,000 to $40,000.

“I see people who, for one reason or another, fall behind in their payments — they lose their job, there’s an illness, they accumulate credit card debt. Then they re-finance,” Bond said. Perhaps one-third of the people who come to see Bond are able to hold on to their homes. Many, she said, “just walk away” from them.

A report from the University of Wisconsin-Milwaukee showed that the number of homeowners with mortgages in Milwaukee increased to 74 percent in 2006, up from 68 percent in 2000. At the same time, the report said the percentage of people paying at least 50 percent of their income on housing costs has nearly doubled, to 19 percent.

Pointer is a reminder of how easy it is for people to get into trouble. Pointer is a first-time homeowner who had a 30-year, fixed-rate mortgage with a rate of 5.5 percent. Pointer got into deep credit card debt and decided to refinance, combining her outstanding debts with the mortgage. Then she lost her job with a Milwaukee financial services company, and was out of work for more than a year.

She found another job, but her monthly payments from her refinancing agreement escalated every six months, she said, starting at $533 and jumping to $750, to $989 and eventually reaching $1,500 a month, which was clearly beyond her means to pay.

The Milwaukee County Sheriff notified Pointer last month that her home would be on the auction block Oct. 30. She had already taken the pictures off the wall and packed the family’s belongings into boxes. However, the sheriff postponed the sale pending a renegotiation of her refinancing terms.

“I don’t want to be put out in the middle of winter,” said Pointer, whose renegotiated payment will still not be much of a bargain: $1,300 a month. Said Bond, “She’s not out of the woods yet.”

Bond said Milwaukee “has only begun to see the beginnings of what’s going to happen” with the fallout from mortgage foreclosures.

Vivid snapshots around the region reflect a stunning upheaval in the housing market. Three Cleveland houses that U.S. Sen. George Voinovich, R-Ohio, has lived in have recently been abandoned.