Transcript Foreclosure Prevention in Kalamazoo County

Foreclosures in Kalamazoo:
Implications & Prevention
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WHO TO CALL FOR
MORTGAGE HELP?
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call as soon as you think you
might have a mortgage
problem
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A crisis in the US
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Source: John Kromer, Senior Consultant, Fels Institute of Government (for the National Vacant Properties Campaign)
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Foreclosures In Michigan
Realtytrac.com
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UNDERSTANDING
FORECLOSURE
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Day 1 to 15
Payments due on the 1st.
Late fee after the 15th day.
Begin communication by contacting your
Lender.
Contact a MSHDA approved lender for
refinance options.
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UNDERSTANDING
FORECLOSURE
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Day 16 to 30
Late charges are assessed.
Loan is in default at 30 days.
Lender sends notice of delinquency.
Negotiate a work out plan (“What are my
options?”).
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UNDERSTANDING
FORECLOSURE
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Day 45 to 60
Lender attempts phone contact.
Lender sends “demand” or “breach” letter
to the borrower pointing out that terms of
the mortgage have been violated.
Once the “demand” letter goes out all
delinquent payments are due. Partial
payments are not accepted.
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UNDERSTANDING
FORECLOSURE
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Day 90 to 105
Lender hires local attorney or other firm to
initiate foreclosure proceedings.
Adds about $1,500 to $2,500 to your costs.
Interest continues to accumulate.
Public Notification – Notice of Foreclosure at the
local courthouse, details of the debt published in
local paper for 4 consecutive weeks and notice
posted on the home.
Sheriff Sale – House sold at foreclosure sale or
auction.
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UNDERSTANDING
FORECLOSURE
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Day 105 to 155
Title transferred subject to Redemption Rights of
the owner.
The “sheriff’s deed” list the last date the property
can be redeemed.
Redemption period is generally six months, but
can be up to 12 months if property is over three
acres or there is more than 50% equity in the
property.
Warning: If you vacate the home the Lender can
accelerate or shorten the redemption period.
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UNDERSTANDING
FORECLOSURE
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To get the property back
you must pay:
Mortgage + interest + last fee + court
costs + attorney fees.
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UNDERSTANDING
FORECLOSURE
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Redemption Period
LIVE in the house
 No payment
 Maintain utilities
 Maintain insurance
 General upkeep
EVICTION – At the end of the Redemption Period you
will receive an eviction notice.
LEGAL NOTICE – You will be served with legal notice of
action. You can appear in court.
Date is set to actually have the Sheriff move your
belongings to the curb.
Source: Michigan State Housing Development Authority
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UNDERSTANDING
FORECLOSURE
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Call 211 first to understand the
problem and resources
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Or call your mortgage service
provider and ask to speak to “Loss
Mitigation Department”
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Foreclosure in Michigan
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According to the Michigan Municipal
League: 1 in 33 homes in the state will be
foreclosed upon
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Joint Economic Committee estimated 24%
of subprime loans in Michigan will go into
foreclosure
(http://jec.senate.gov/Documents/Reports/10.25.07OctoberSubprimeReport.pdf
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Foreclosure in Kalamazoo
County
According to Realtytrac.com:
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695 properties in Kalamazoo County in
foreclosure process now
Of these, 462 have a “Kalamazoo”
address (2 out of 3 in county)
Majority of these are classified as “bankowned”
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Foreclosures in City of
Kalamazoo
Sherriff's Deeds
500
450
400
350
300
250
200
150
100
50
0
448
331
270
2005
2006
2007
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Foreclosures in City of
Kalamazoo
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1,143 foreclosures in City of Kalamazoo
from January 1, 2005 – May 1, 2008
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Top 4 foreclosing banks:
MERS (157)
 Deutsche Bank (136)
 US Bank (95)
 Wells Fargo (94)
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Foreclosures in City of
Kalamazoo
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1 out of 4 foreclosures in Kalamazoo is a
rental property
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Tenants have very little rights in a
foreclosure and often are given limited
notice to move out
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The numbers point to more
trouble ahead
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Median household income, $ (2000)
USA
 Michigan
 Kalamazoo County
 Kalamazoo City
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Source: dataplace.org
$41,994
$44,647
$42,022
$31,189
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The numbers point to more
trouble ahead
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% of conventional mortgage loans by
subprime lenders (2004)
USA
 Michigan
 Kalamazoo County
 Kalamazoo City
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Source: dataplace.org
18.7%
18.0%
15.8%
24.1%
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The numbers point to more
trouble ahead
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% conventional refinancing mortgage
loans by subprime lenders (2004)
USA
 Michigan
 Kalamazoo County
 Kalamazoo City
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Source: dataplace.org
21.3%
19.7%
20.3%
31.7%
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The numbers point to more
trouble ahead
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Median borrower income for owneroccupied purchase (2005)
USA
 Michigan
 Kalamazoo County
 Kalamazoo City
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Source: dataplace.org
$70,000
$57,000
$56,000
$43,000
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In the city, foreclosed property is in specific neighborhoods
Oakwood and S. Westnedge
areas
Source: RealtyTrac.com
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Northside
Source: RealtyTrac.com
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Edison
Source: RealtyTrac.com
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Eastside
Source: RealtyTrac.com
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IMPACT ON SURROUNDING
PROPERTIES
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Examples of Foreclosure
Pushing Down Values
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Assessor’s Cash Value = $33,000
 Currently for sale by bank: $8,900
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Assessor’s Cash Value = $56,000
 Currently for sale by bank: $7,900
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CHANGE IN ANNUAL
RESIDENTIAL ASSESSED
VALUES
% change
8
6
5.8
6
5.2
4
2.8
2.2
2
0
-2
-4
2004
2005
2006
2007
2008
prelim.
2009 est
-3.1
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Although Residential Assessed values are
expected to decline, overall TAXABLE values
are still expected to rise in 2009
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This is because some properties have a taxable
value which is less then the assessed value
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The taxable value must continue to rise at rate of
inflation until it catches up with the assessed
value
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Kalamazoo Area Foreclosure
Prevention Partnership
City of Kalamazoo
Greater Kalamazoo United Way
Housing Resources, Inc.
Kalamazoo County
Kalamazoo Neighborhood Housing Services
Legal Aid of Western Michigan
Local Initiatives Support Corporation
Northside Association for Community Develpmnt.
State of Michigan Department of Human Services
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Kalamazoo Area Foreclosure
Prevention Partnership
Working together:
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Coordinate services
Coordinate and increase funding
Mortgage counseling & negotiations w/ lenders
Provide education to public and agencies
Identify issues and opportunities
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Kalamazoo Area Foreclosure
Prevention Partnership
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211 = first place to call
KNHS = mortgage counseling
DHS = emergency financial assistance
Legal Aid = legal assistance
HRI = Transitional shelter
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Counseling Does Work
Lighthouse Community Development
Corporation (Pontiac, MI)
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Average cost of helping a client avoid
foreclosure through the Lighthouse
program is $910
Average cost to society of a mortgage
foreclosure is $22,330
Average cost to the investor is $50,000$60,000
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AVOID SCAMS
Be wary of anyone who calls or stops by
your home with an offer too good to be
true.
Predatory buyers or scam artists may
pretend to help you. What they really want
is your property.
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AVOID SCAMS
Look out for someone who…
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seeks you out to “solve” your financial problems
pressures you to make a quick decision
demands large up-front fees
tells you not to contact your current lender or bank
tells you not to contact a lawyer
asks you to sign papers without giving you a chance to read
them
asks you to sign papers with blank spaces
asks you to sign a deed
offers to file bankruptcy for you
Source: Washtenaw County Treasurer
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Tax foreclosure versus Bank
foreclosure
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County treasurer does tax foreclosure in spring
of each year
Taxes which are 2 years delinquent
In December of 2007 1,000 parcels in the county
were to be tax foreclosed on in March
As of March 31, 2008 the County foreclosed on
107 properties of which 9 are homesteads.
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Tax foreclosure versus Bank
foreclosure
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County assistance through direct
outreach to delinquent taxpayers
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Helped delinquent taxpayers by setting up
a payment plan. Minimum payment = $50
per month.
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County gave taxpayers poverty exemption
form
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• Available to low income homeowners
• Senior citizens pay no more than 3% of their
income, after homestead credit rebate from the
State, for property taxes
• Citizens under age 65 pay no more than 5% of
their income, after homestead credit rebate from
the State, for property taxes
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CONTACT THE KALAMAZOO CITY
ASSESSOR’S OFFICE FOR
APPLICATION & GUIDELINES
337-8011
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WHO TO CALL FOR
MORTGAGE HELP?
211
call as soon as you think you
might have a mortgage
problem
41
Prepared by:
City of Kalamazoo
Community Planning & Development Department
Sources:
Kalamazoo Vice Mayor Hannah McKinney
Kalamazoo County Treasurer Mary Balkema
other sources as noted
June 30, 2008
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