The Housing Bubble

The Associated Press reports on California. “An overflow crowd piled into the Merced Civic Center, spilling out of the main auditorium, into the halls and down the stairs. Everyone brought paperwork. the sum of their financial lives and wreckage of their American Dream. Organizers of the Merced fair had worried that attendance would suffer from too little notice; instead, they were overwhelmed by the response.”

“That same day, another 200 mobbed a fair in Los Banos, an old farming city of 35,000 residents, also in Merced County. Five percent of Los Banos’ 10,000 houses have already foreclosed and another five percent are expected to foreclose in the coming months, said Rep. Dennis Cardoza, whose district includes much of the Valley.”

“‘You’re talking 10 percent of an entire city becoming homeless,’ Cardoza said. ‘I don’t know how much worse things can get.’”

“The median home price in Merced County in January was $215,000, down 33.8 percent from a year earlier, according to DataQuick. In some towns in the county, such as Atwater, housing values have dropped 50 percent, officials said.”

“‘We’re three payments behind, which they told us here is not that terrible,’ said Elizabeth Gomez. ‘If we can’t hold on, we’re lost.’”

“Most families had similar tales of woe. One couple said the same broker who had written their loan in 2005 promising he would help them refinance it to a 30-year fixed rate when the teaser rate of two percent expired refused to take their calls. Their mortgage on a $300,000 house mushroomed from about $900 to over $2,000.”

The Recordnet. “A measure to address one byproduct of the housing market’s collapse - the overgrown yards, stagnant swimming pools and general disrepair of an increasing stock of vacant houses - was removed Tuesday from the City Council’s agenda, referred to the council’s legislative panel for review.”

“‘The real estate lobby is going nuts,’ said Stockton’s Property Management Experts Inc.’s Terry Hull Sr.. ‘This is just a classic case of not doing things carefully.’”

“In north Stockton, retired school clerical worker Shirley Kabatt said broken fences and unkept lawns at vacant houses near her home have lessened the value of her house and the appearance of her neighborhood.”

“‘This is my investment,’ she said. ‘Something has got to be done.’”

“In a report, the city estimated nearly 10,000 Stockton homes are in various stages of financial distress or foreclosure.”

The Santa Cruz Sentinel. “If you’re among the 250 homeowners in Santa Cruz County who got a default notice in January or February for not paying your mortgage, the headlines announcing counseling services are tantalizing.”

“But $180 million in federal money and another $8 million in state grants to hire counselors have been earmarked for other locales, so little help is close at hand. Even if more counselors were available, Mary Mackenzie James isn’t sure that would help overextended borrowers keep their homes.”

“‘People are in crisis,” said James, who oversees the Housing Authority of Santa Cruz County. ‘What they need is money. Deferred-interest loans, that’s what they need, not advice.’”

“American Dream Realty acquired a competitor, Network Alliance, on Monday, creating the largest locally owned real estate company in the county. Two smaller real estate firms closed some of their offices.”

“In each case, it’s about survival in a real estate market being squeezed by plummeting sales. February sales statistics aren’t available yet but in January only 66 homes sold, the lowest monthly total in a decade.”

“‘I think more mergers are likely as companies and agents streamline overhead to survive this slowdown,’ said Tai Boutell of Santa Cruz Home Finance. ‘There simply are not enough transactions today to support the number of lenders and Realtors that the active market of the past two to three years created.’”

The Orange County Register. “During the past four months, liens, lawsuits and land repossessions have been piling up against SunCal Companies, the family-run business that’s behind such developments as Marblehead Coastal in San Clemente and the failed attempt to build 1,500 homes in the Disney resort.”

“A SunCal spokesman said the land developer is being plagued by the same problems besetting other developers: a housing slump that’s curbed sales and crimped prices, often on land bought during the height of the last housing boom.”

“‘Many of our projects are very good. Others are in markets that have been hit harder in this downturn,’ said David Soyka, SunCal’s senior VP of public affairs. ‘Like any developer and builder, we’re facing financial challenges.’”

“Bill’s Sweeping Service of Orange, for example, held off filing a claim even though SunCal owed the firm $25,000 since July. For two years, the sweeping servicekept the streets clean around SunCal’s Del Rio project in Orange as trucks hauled in dirt to convert an old gravel pit into home sites. Then, the company suddenly stopped paying.”

“‘For 1 ½ years, they paid like clockwork,’ said Mark Carter, president of Bill’s Sweeping Service. ‘Then when things got tough, they clammed up. … We had to hound them (to get paid).’”

“Land developers, who convert raw land into developable lots, are suffering because cash-strapped homebuilding firms have stopped buying home sites, experts said. That’s especially tough on developers who relied on financing to buy land since their carrying costs are eating them up.”

“‘It’s a very challenging time for them,’ said Steve Cochrane, the California economic analyst for Moody’s Economy.com. ‘Right now, it’s sit and wait for the bottom. … If it doesn’t come back in a year or two, you’ve got to find some other way to keep going.’”

“Zwirn Special Opportunities Fund, which had lent SunCal $75 million, repossessed a north Santa Ana apartment building on Monday after no one made the minimum $49 million bid. Two other properties in Tustin, including an apartment building where SunCal planned to build its three-story Hampton Village condos, are scheduled to be auctioned off on Thursday.”

“‘Because of the market conditions, we decided not to pursue the property,”‘ said Soyka.”

“Like many public builders, SunCal is in the process of asking its subcontractors to help it absorb the effects of the national building industry downturn, Soyka said. ‘Some of these subcontractors are cooperating, and some have, regrettably, filed suit.’”

“Soyka said work also has slowed down on at three other projects in the state. Work has slowed on bridge construction at the Marblehead Coastal development, he said, as well as on SunCal’s McAllister Ranch development near downtown Bakersfield, where contractors and suppliers have filed $2.2 million worth of liens, he said.”

“Soyka said McAllister Ranch no longer is on an ‘accelerated construction schedule,’ adding: ‘With the cyclical conditions of the housing market, it has become necessary to adjust our timelines.’”

The Voice of San Diego. “In December, I heard the County Assessor’s Office was slammed under property owners’ requests for tax reassessments. The influx continues, apparently. I chatted this morning with Jeff Olson, a colleague of Assistant County Assessor David Butler. The office has received 3,200 applications since Jan. 1.”

“‘We’re getting about a hundred a day,’ Olson said. ‘We’re anticipating receiving about 10,000 requests” before the May 30 deadline, which marks the end of the tax year.’”

The Gazette. “The combination of the strong Canadian dollar and plummeting real estate prices in the U.S. due to the sub-prime mortgage disaster has made buying property feasible again, especially in Florida and California where home prices had risen dramatically in recent years.”

“In California, resales of single-family homes have dropped more than 23% in each of the past two years and are forecast to keep dropping until 2009, according to the California Association of Realtors.”

“‘We have some way to go until the bottom,’ agrees San Diego realty company owner Marc Carpenter. ‘We’ve never seen such a spike in the amount of foreclosure activity. It’s shocking.’”

“His foreclosure listings went from zero to 275 in two years. He sees Canadians coming to pick up condos selling for 30% to 40% off peak prices. ‘It’s great for our economy,’ he says. ‘We need foreign investment here.’”

The County Sun. “Inland Empire auto dealerships appear to be driving the wrong way lately, with slumping sales and some filing for bankruptcy or closing down. Sales at auto dealerships in Claremont, Ontario and Pomona have slowed, and a Loma Linda Saturn dealership announced Monday it would close its doors.”

“An automobile dealership that has been in business since 1966 in San Bernardino demonstrated just how tough the times are by filing for bankruptcy.”

“Greg Heath, VP at Ontario-based Mark Christopher automotive dealerships, said sales are down about 25 percent compared with last year. ‘It’s not only on the sales end but the service end, too,’ Heath said. ‘People are just holding onto their money.’”

“The hardships local auto dealers are experiencing is another sign of an impending recession, Redlands-based regional economist John Husing said.”

“‘Next to housing, the most expensive thing people buy is cars,’ he said. ‘If the economy is slowing down, people are feeling bad. If gas is sky high, then they feel even worse. This is not the time that they go out and buy a car.’”

“Peter Welch, president of the California Motor Car Dealers Association, said the subprime mortgage crisis is also to blame. ‘Anytime you have a slowdown in the housing industry, other industries suffer,’ he said. ‘It’s just a sign of the (economic) times we’re in.’”

“In economic times as skittish as these, it’s the little luxuries that fall from favor first. Robin Olsen, a Phelan resident and public school teacher, has forgone about 4 ounces of her daily honey latte at Starbucks, saving nearly a dollar per fill-up by downsizing.”

“Standing outside a Starbucks and gas station on Monday afternoon, staring at two types of gasoline whose prices keep climbing, Olsen said economic insecurity is the order of the day.”

“‘It’s not much, but it adds up,’ Olsen said. ‘The state budget is making education go out of style. And with housing prices going down and gas prices going up, I think more about every dollar we spend.’”

“Starbucks, the uber-coffee chain, has announced it will close 100 stores due to sluggish sales, an unheard-of development just a few years ago. ‘We’re here because we have a gift card,’ said Pam Sanicola, a furniture saleswoman, while sipping a pricey java on a University Parkway Starbucks Coffee patio.”

Some housing bubble news from Wall Street and Washington. Reuters, “WCI Communities Inc, which builds high-end homes, said it expected to record a pre-tax, fourth-quarter loss in the range of $410 million to $460 million partly due to the hard-hit Florida housing market. The U.S. company said the loss includes impairment charges of about $335 million to $350 million for lower value of land, unsold homes and apartments, abandoned option deposits and goodwill write downs.”

“The company also said it would recognize a $38 million reserve for Oceanside, a Florida high rise, because of a high number of buyers who walked away from deposits.”

From MarketWatch. “French bank Credit Agricole swung to a fourth-quarter loss of 857 million euros ($1.3 billion) following a $5 billion write-down. Analysts cautioned there could be more write-downs on the way as the bank still has some residual exposure to struggling bond insurers and its impairment assumptions for certain mortgage-related investments appear less conservative than those of peers.”

“Utrecht-based Rabobank, one of the largest retail banks in the Netherlands with more than 9 million clients, said it booked a loss of 284 million euros on investments in residential mortgage-backed securities (RMBS) and other investments whose risks have recently become more exposed.”

“Rabobank reiterated that it had no direct exposure to subprime mortgages that were made to risky home borrowers who were later unable to pay.”

From The Age. Rising costs of funding loans resulting from the US subprime-induced credit squeeze have forced Macquarie Bank to wind back its $23 billion domestic residential mortgage business.”

“Macquarie Securitisation makes its money by packaging the loans and selling them to investors as bonds. Macquarie had been paying significantly over the bank bill rate to stay in the business.”

From Bizjournals. “JPMorgan Chase & Co. will not extend the 30-day moratorium on foreclosures it backed last month as part of President Bush’s plan to minimize the housing downturn, CEO Jamie Dimon said. That moratorium is set to expire in the middle of March.”

“The New York financial giant has written down more than $3 billion in the past two quarters. Dimon expects more to come, as Chase still holds some $50 billion in ‘risky assets,’ he said. ‘We made some mistakes,’ he said to the more than 750 luncheon attendees.”

Dow Jones Newswires. “Robert Sheridan, president at Robert Sheridan & Partners, comments on the Dow Jones Newswires story ‘Fueling Housing Decline, Lenders Retreat From Tough Markets.’ ‘These steps by lenders may seem cynical, but they are necessary to avoid ‘catching a falling knife’ by making loans when prices are expected to drop a lot further. This is tacit confirmation of what we have been saying for months.’”

“1. There needs to be a significant price correction to bring this market into balance. 2. The worst is yet to come in housing prices. 3. Losses on existing loans will be much greater than is generally expected.”

“Lenders including BankUnited and a wholesale lending unit of Wachovia Corp. have elected not to lend to some areas or properties because of declining prices. Other lenders have tightened underwriting guidelines for slumping markets so as to make financing nearly unattainable.”

“‘We don’t call it blacklisting,’ said an official at a large bank. ‘We just don’t write the loan.”‘

“As U.S. regulators reflect on lessons learned from the subprime mortgage crisis, the Federal Reserve admitted on Tuesday it should have been more forceful with the banks it supervises.”

“‘One of the lessons learned is that we need to be more forceful,’ said Fed Vice Chairman Donald Kohn when pressed by Sen. Richard Shelby to explain why bank regulators did not spot subprime mortgage problems earlier.”

“‘We did not perform flawlessly. I absolutely agree with that,’ Kohn said, adding that the Fed was conducting an internal review of what it should have done differently. Asked by Shelby if the Fed was afraid of the banks that it supervises, Kohn responded: ‘No.’”

“‘Through public speeches and private meetings with bank representatives over years, the Fed tried to warn banks about their exposure to risky subprime mortgages before they exploded into the current crisis, Kohn said.”

“‘That might not be the most effective way to make a point.’ said Jack Reed of Rhode Island. ‘I have to ask questions about the culture of regulation at the Fed.’”

“The hearing provided a glimpse into how the Fed, which is most known for its role as the powerful U.S. central bank, communicates with individual banks it supervises. ‘A lot of people believe the Fed was asleep at the switch,’ Shelby said.”

“Kohn defended the Fed, saying it was ‘a very hard sell’ for the Fed to get banks to focus on potential risks when the U.S. economy was booming and banks enjoyed record earnings. The Fed supervises about 5,000 bank holding companies with consolidated assets of about $14.2 trillion and 870 state member banks with more than $1.5 trillion in assets.”

“‘It’s a hard sell for the banks, yes, but you’re the supervisor,’ Shelby responded impatiently. ‘You’re also the central bank, so you have not just a little bit of power, but a lot of power.’”

The Associated Press. “‘The problems in the mortgage and housing markets have been highly unusual and clearly some banking organizations have failed to manage their exposures well and have suffered losses as a result,’ said Kohn.”

“Under questioning from Sen. Richard Shelby, Kohn acknowledged that the Federal Reserve did not anticipate hefty mortgage-market losses. ‘I don’t know that we fully appreciated all these risks out there.’ Kohn said. ‘I’m not sure anybody did.’”

“As the U.S. housing meltdown forces hundreds of thousands of Americans from their homes, the extent to which fraud was a factor in the crisis is just coming to light. Many fraud schemes kept running as long as cash kept flowing from Wall Street. Once the credit crunch turned off the supply of easy money, the perpetrators simply walked away.”

“Arthur Prieston, chairman of the Prieston Group, which provides mortgage-fraud insurance and training to lenders, said that ‘at least 30 percent of the loans out there contain some form of misrepresentation.’”

“‘But because lenders often have to sell off properties quickly to cut their losses, we will never know exactly how much mortgage fraud has been committed,’ he added.”

“Prieston estimates that mortgage-fraud losses were around $4.2 billion for 2006, adding that figures for 2007 ‘will be much higher.’ Prieston said that had major lenders been proactive in checking the identities of the people who were buying properties using stated-income loans and similar products, then a lot of fraud could have been avoided.”

“‘A lot of lenders claim they were victimized by fraud but helped to constitute it by looking the other way,’ he said.”

“In a recent case in Chicago, he said the authorities prepared to file charges against a woman who had fraudulently bought five properties. ‘When we turned up to serve papers on her, we found she was 9 years old,’ he said. ‘Her uncle had stolen her identity.’”

“‘The vast majority of the cases I’m aware of involved straw buyers,’ said according to Boston-based real estate analyst John Anderson. ‘Thanks to products like stated-income loans, people walked away with a ton of free money.’”

“Anderson is among those who were warning for years that easy credit created an easy climate for fraud. ‘The banks on Wall Street had to know there would be fraud. If they didn’t they’re morons,’ he said.”

From USA Today. “As housing prices continue to fall, real estate agencies are responding with a marketing onslaught to try to entice reluctant shoppers to get off the fence and buy.”

“‘The theme now is that’s it’s a great time to buy,’ says David Rea, chief creative officer for RE/Max, who directs its advertising.”

“It’s not such a great time to be in his business, however.”

“‘We had an incredible run for the past five years,’ Rea says. ‘A lot of it had to do with lower interest rates and probably the subprime. It was one of the most productive real estate markets ever. But it can’t go on forever, and everybody knew something was going to happen.’”

The Boston Herald. “Boston Federal Reserve senior economist Alicia Sasser and Lawrence Yun, the National Association of Realtors’ chief economist, told a real estate conference in Cambridge that while Hub housing remains depressed, the market has already planted the seeds of a turnaround.”

“‘Probably the worst for the Boston housing market is over,’ Yun said. ‘It’s possible that we might see a notable rise in home-sale activity in the second half, or we might just see more of a stabilizing, no real major change up or down.’”

“Still, Sasser and Yun say burgeoning home foreclosures, a big backlog of unsold properties and other problems continue to hurt the Hub.”

“Yun thinks the biggest factor holding the market down involves buyers who hang back because they think prices might fall further. ‘Will (the market) decline further from this point?’ the economist asked. ‘Yes - if the buyer remains pessimistic. Buyer pessimism can be self-fulfilling.’”

The Leader Post. “The Regina real estate market continues to fire on all cylinders, according to a report released by the Association of Regina Realtors on Tuesday. And the market doesn’t look like it will be cooling off anytime soon, said Gord Archibald, the association’s executive officer.”

“‘Assuming the economy continues to do well (and) generates jobs (and) attracts newcomers and expatriates back to the city, we’re going to continue seeing high levels of demand,’ he said. ‘It’ll take some time for the supply side to catch up to that,’ he said.”

“The average price of all residential properties sold last month was $204,459, while the average price for single-family-detached homes was $221,717. In February 2007, those figures were $132,519 and $136,991, respectively. That represents year-to-year price gains of 54.3 per cent for all residential properties and 61.8 per cent for single-family-detached homes.”

“But just how many more dollars are changing hands is …’staggering,’ according to the association. Last month was the 13th-straight month of record-setting home sales in Regina, the report said. But homes aren’t just selling for more money these days, they’re also selling a lot faster.”

“‘The prices just keep on going up, even in the traditionally slower months,’ Archibald said.”

“Archibald also warned against first-time home buyers trying to wait out Regina’s hot real estate market. ‘Get into the market early,’ he said. ‘Prices are likely to go up and the earlier you get in, the greater the chance you’ll find a home that fits your needs.’”

The Herald Times reports from Indiana. “In May 2006, a middle-aged couple decided to sell their Morgan County ranch home. So they contacted broker Sheila Scott in Martinsville, and told her they wanted to list the home at $209,000 — $10,000 more than its appraised value. ‘It was a beautiful home in wonderful condition,’ Scott said. ‘Three years ago it would have sold very quickly — and for full price.’”

“But no sooner had Scott listed the property than the air began seeping out of the housing-price bubble. An oversupply of homes in the area and a paucity of qualified buyers meant that…the house languished on the market. ‘The market just went dead,’ Scott said.”

“For 17 months, the couple paid a total of $2,400 each month to cover two mortgage payments. The same month they had put their house on the market, they also had moved into a $347,000 home in northern Morgan County.”

“They finally sold their first home last October for $171,500, 14 percent lower than its appraised value. To add insult to injury, the buyers required the couple to forfeit their refrigerator, putty all the nail holes on the home’s exterior, and give it a fresh coat of paint.”

“‘What happened to them broke my heart,’ Scott said. ‘But the buyers got a fantastic deal.’”

“Ken Blackwell, owner of Blackwell Construction in Bloomington, blames the slowdown on the national credit crunch coupled with a glut of single-family homes on the market.”

“‘When things are going well, everyone becomes a developer and builder, flooding the market with too much inventory,’ he said. ‘Today, you can drive around Bloomington and see subdivisions no one has even heard of.’”

“Steve Martin, chairman of the Real Estate Certification Program, said central Indiana is in a catch-up cycle. ‘For seven years we were in a free-fall spending cycle, with people taking mortgages they could not afford,’ he said. ‘Now we’re catching our breath and being more realistic about our spending.’”

The Record Eagle from Michigan. “Jacki and Ben Newhouse can’t find a buyer for their two-bedroom home that’s listed for $8,000 less than its appraised value. Yet Acme Township’s assessor said the property’s value increased $6,400 last year.”

“‘We haven’t seen a big decrease like downstate, but it is a leveling off,’ said Laurie Spencer, equalization director for Grand Traverse and Leelanau counties. ‘Some are going up, some are slightly decreasing, but a lot of them aren’t going to change much at all.’”

“That doesn’t make much sense to Jackie Newhouse, who hasn’t had an offer on her renovated house in two months. ‘I don’t understand it. Everything you see tells you the market is terrible,’ Newhouse said. ‘Our house has gone through a complete renovation, but I’m not trying to recoup any of our improvements. I’m just hoping to get a little bit of our equity out of it.’”

“‘We’ve lost 20 percent of market value in the last two and a half years,’ said real estate agent Carol Franklin of Traverse City. ‘Without a doubt, the local market is declining and it’s still declining.’”

“Real estate broker Cindy Anderson said she has clients listing homes near downtown Traverse City for $30,000 less than the appraised value. ‘I have a sinking feeling assessors don’t realize that some homeowners are having to sometimes sell for $20,000, $30,000, $40,000 less than what they bought for a few years ago,’ she said.”

“In Traverse City, city assessor Debra Chavez said the city witnessed the largest hike because it doesn’t have new subdivisions and builders trying to unload their inventory. But not everyone in the city will see an increase. Many homes priced around $150,000 or less dropped 10 percent or more, Chavez said.”

“‘They were being kept artificially high by the market and have dropped back down to where they should be,’ Chavez said.”

“Franklin and Anderson said foreclosures started affecting the market last fall, and now account for about 10 percent of sales.”

“‘Banks are sitting on a huge inventory right now and they are putting liquidation prices on the houses to try and unload them,’ Franklin said. ‘So sellers have to compete with the banks prices.’”

“Foreclosures in Grand Traverse County jumped 63 percent in 2007, peaking at 291. Grand Traverse Register of Deeds Peggy Haines said indications are 2008 will be just as bad or worse. Already, 68 homes are in foreclosure, just two months into the new year.”

“‘There’s assessed value, taxable value … and market value and I’ve learned they have nothing to do with each other,’ said Kalkaska area real estate broker Sue Vowels. ‘They are not from the same country, they’re not even from the same planet.’”

The Livingston Community News from Michigan. “Mike and Amanda Prince have a plan. They think it’s a good one. Despite a housing market with a larger-than-ever inventory and stagnant or slipping sale prices, the South Lyon couple hopes to sell their condo, rent an apartment for a year while they save money, and then get a better-than-average deal on a new house.”

“The couple, both in their mid-20s, got married last fall and now have Sam, an Australian shepherd, and ’some more space would be nice,’ Mike Prince said. He was renting a condo with a roommate in South Lyon in 2005 when the property went up for sale.”

“‘It seemed like a good idea at the time to buy it,’ he said. ‘Given what’s happened in the market, I would have waited.’”

“Prince bought his condo in 2005 for $119,900 and it is listed now for $115,000 - so he gained no equity. But they still want to move.”

“So on the advice of Karen Jolley of Buckley Jolley Real Estate Team in Brighton, the couple decided to sell the condo and wait to buy a house. Prince said he is hopeful they will still get a good deal on a house in the $300,000 range when the time is right.”

“‘It’s tough. We have it listed at a slightly lower than purchased price,’ he said. ‘You take the sting now. The nice thing is there’s no sense of urgency. It allows us to take our time and not fight the market,’ he added.”

“‘I wouldn’t say the market has turned around, but there are buyers out there,’ said Michelle Brant, executive VP for the Livingston County Association of Realtors.”

“The average sale price in Livingston dropped 10 percent from 2006 to 2007 from $242,043 to $219,566 - but is still higher than nearby Oakland and Wayne counties, where average sale prices have dropped to $210,149 and $105,635 respectively, according to information from Brant.”

“Jane Pendleton, president of the LCAR, said it has taken a few years for homeowners to understand the market adjustments and to accept listing prices that will sell.”

“But, she said, they now have. ‘The biggest change,’ she said. ‘Is that sellers are on board. What we need to do is remind people that there are still good deals out there, and to regain confidence in the market.’”

“Todd Buckley of the Buckley Jolley Real Estate Team in Brighton, who has been in the business 11 years, said property owners are coming to terms with what the market will bear. ‘This is today’s new normal,’ he added. ‘Unfortunately, we can’t look at the values three years ago - in moving forward, we have to think differently.’”

The Daily Northwestern from Illinois. “The number of Evanston homeowners unable to pay their mortgages tripled in the past year, leaving more than 300 homes in a state of mortgage crisis.”

“About 220 homes in Evanston are in a pre-foreclosure state, meaning owners are three or more months behind on mortgage payments, according to RealtyTrac. About 65 properties are bank-owned, and about 35 are being sold in auction, often at below-market prices.”

“In Evanston, the crisis will likely lower property values and hurt the city’s income from taxes, said John Lee Bingham, a realtor with Baird and Warner who submitted a report to Mayor Lorraine Morton about the problem.”

“The problem of foreclosures has grown worse in the past year due to skyrocketing mortgage rates and, sometimes, irresponsible financial decisions, Bingham said.”

“‘Once in a while you’d even see what I think is the most foolish thing of all, and that would be people living way beyond their means,’ he said. ‘We joke about it, but I’ve seen people living in Wilmette in a big house and they have no furniture. I’d say most people are one health problem away from bankruptcy.’”

“Property values are based on supply and demand, Bingham said, which makes foreclosures a problem for the entire neighborhood. When homeowners are unable to pay their mortgage, their home can be seized by the mortgage company and sold for a lower price than the market value.”

“This drives down prices in the surrounding area, making neighbors sell their homes for less than they paid originally.”

“Bingham said the housing market could be helped by real estate agents and homeowners looking to other strategies to sell their properties instead of lowering prices, which in turn lowers prices in the whole area.”

“‘People depend so heavily on price to sell their condos and their houses, when you can benefit everyone in the building and keep the price respectable,’ he said.”

“Although Evanston’s housing market is better than in many cities, Bingham said he has seen many property owners lose their homes to high mortgage prices.”

“‘It’s devastating for so many people that this has happened,’ Bingham said. ‘I was watching people buy homes that had dreamed of owning homes all their life. They’re losing those homes now.’”

The Watertown Daily Times from Wisconsin. “With the mortgage rate freeze and the housing industry in a slump the number of foreclosures in Dodge and Jefferson counties is on the rise.”

“Twenty-nine Dodge County residents have lost their homes in foreclosures already this year with another 100 more properties ready to be sold, according to Dodge County Sheriff’s Department Chief Deputy Blaine Lauersdorf.”

“‘And we are only in February which leads me to be believe we will be going over the 160 mark by the end of the year,’ he added.”

“One-hundred sixty is the number of home foreclosures in the county in 2004, the largest total in many years. The numbers are up significantly from the beginning of the decade, when 82 auctions were held in 2002 and 75 reported in 2003.”

“‘We are seeing them happen more frequently these days,’ he said. ‘My belief is the interest rates and the balloons (payments) that have come due are causing people to struggle to find ways to pay for those mortgages,’ Lauersdorf said. ‘A couple of years ago the money was easy to get for mortgages and now people are struggling to pay for the homes they purchased.’”

“Occasionally, a lot of people attend a sale, but ‘about 90 percent of the sales go back to the plaintiff representative or the bank or the lender,’ he said. ‘Many times no one attends and the property goes back to the lender.”

“Sgt. Jerry Haferman of the Jefferson County Sheriff’s Department…said the foreclosure trend is something his department is, of course, very aware of as being on the increase, but he said other sheriff’s departments throughout the state are also being forced to dedicate increased amounts of time and manpower to the process.”

“‘We are noticing a lot, but this is something that is happening throughout the state,’ he said.”

“‘I attended a civil process meeting in Oneida County recently, and 10 other counties’ representatives were there and every county is seeing a drastic increase in foreclosures. We dedicate several days a month to conducting these sales and other counties do the same, and some sheriff’s departments are still having to increase the numbers of sales they have to hold,’ Haferman said.”

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