By Melissa Dunson
mdunson@joplinglobe.com
For years, those in real-estate sales in Southwest Missouri have said this area has been insulated from much of the economic fluctuations regularly facing the coasts.
But when it comes to foreclosures, those same agents, along with local government offices and nonprofit agencies, say the Joplin area is seeing the same jump in homes going back to lenders that is taking the rest of the country by storm.
So far this year in Jasper County, 327 families have lost their homes to foreclosure. That compares with 429 foreclosures for all of 2006 and 343 in 2005.
The McDonald County recorder’s office also is reporting a large jump in the number of pre-foreclosures this year. The first step in a foreclosure is the appointment of successor trustees, and as of Tuesday, McDonald County had appointed 76 successor
trustees. That is significantly more than the total of 50 for all of last year. In 2005, 70 cases were reported.
According to the recorder’s office, Barton County has had 19 foreclosures so far this year. Last year, the county had 13. Barton County had 20 in 2005 and 17 in 2004.
Newton County, Mo., and Cherokee County, Kan., did not have local foreclosure information readily available.
Cheryl Ray-Jones, a certified credit counselor with Consumer Credit Counseling Service in Joplin, said her office is seeing such a jump in local home foreclosures that all the counselors in her office recently had to become certified by the U.S. Department of Housing and Urban Development just to deal with the demand. Ray-Jones said her office used to deal primarily with credit-card debt, but that half of its work now comes from bankruptcy and foreclosure proceedings.
“I wish I had the answers,” she said, “because it is a problem that is affecting a lot of people right now.”
Janice Franklin, managing attorney with Legal Aid of Western Missouri in Joplin, said her office has seen an increase in foreclosure counseling in the past few months. Legal Aid has been doing the counseling since last year, and Franklin said the stories are becoming more frequent and more devastating.
“We’ve seen horror stories,” she said. “The ripple effects of foreclosure go through the whole family. We were seeing so many there for a while it was almost one every day.”
Local real-estate sales agents are also trying to deal with the effect of an increasing number of foreclosed homes. Ed August, a Charles Burt sales agent in Joplin, said his office has seen a growing number of foreclosures in recent months.
Donny Allen, president of the 2008 Ozark Gateway Association of Realtors board and a Keller Williams real-estate agent in Joplin, said the local numbers are nowhere close to the national rates but are definitely on the rise. At any given time, he said, his office has 20 to 30 repossessions going.
State and national
The local numbers are a reflection of a greater bust affecting the rest of the state and the nation. RealtyTrac.com, a leading online marketplace for foreclosure properties, released its latest numbers for August, reporting the highest number of foreclosures since it began issuing the report in January 2005.
There were 243,947 foreclosure filings nationally in August, a 36 percent increase from the figure for the previous month. That is one foreclosure for every 510 households nationally. The filings include default notices, auction-sale notices and bank repossessions.
In Missouri, 3,079 foreclosures were filed in August, one for every 842 households. That is more than a 50 percent jump from July’s total and more than a 130 percent increase from the figure for year before.
Nevada, Florida and California were the states with the most filings in August. They were followed closely by Georgia, Ohio, Michigan, Arizona, Colorado, Texas and Indiana. Officials at RealtyTrac say the increased number of filings is connected to the large number of subprime, adjustable-rate loans starting to reset.
The August report was the latest in a yearlong series of bad news for homeowners. For the first six months of 2007, RealtyTrac reported that more than 500,000 properties were in some stage of foreclosure, up more than 30 percent from the total for the previous six months, and up more than 55 percent from the figure for the first six months of 2006. Over the first six months of 2007, Missouri had one foreclosure for every 184 households.
‘Creative financing’
Local attorneys, credit counselors and Realtors tend to agree with the national assessment that much of the recent housing fallout is the result of adjustable-rate mortgages and some predatory, or at least unwise, lending practices.
Franklin and her paralegal, Sandy Blackford, said the most common factors they see locally for foreclosures are people with budgets stretched too tight who cannot make their monthly payments when their adjustable rates go up or when they have an unexpected life change.
“These people are stretched so tight just to pay (their house payment) in the first place,” Franklin said. “When the rates go up, they just can’t do it anymore. You wonder how these people even got the loans in the first place. We saw one case recently where the lender had to break the money up into two different loans just to make the people qualify for it.”
Franklin thinks that in some of these cases, the lenders should take some responsibility for the situation they helped create by making a way for people to get in over their heads. She said she believes in personal responsibility, but that consumers should have all the information they need to make the best decisions for their families.
Allen blamed “creative financing” for much of the rise in foreclosures he has seen in the past three to four years. He said unexpected life changes have always resulted in some foreclosures, but adjustable rates and subprime loans are causing the current spike in repossession numbers.
“These different kinds of loans start off in your favor, but they get out of hand quickly,” he said.
The story is the same through August’s eyes. He said some home buyers with no down payment and questionable credit get loans for more than the value of the house, and with the slowing appreciation rate, people cannot sell their homes for what they still owe even two to three years after buying them.
“Unfortunately, buyers who have credit issues tend to keep those issues and seldom break that pattern,” August said. “It’s (lenders’) responsibility to lend better, but unfortunately there are those predatory lenders that target these types of borrowers.”
Ray-Jones said her office sees its share of predatory-lending situations in which lenders give people with bad credit 120 percent loans that they cannot pay off. But she said many of the situations involve borrowers not making financial room for life changes such as sickness, divorce, a growing family or job loss.
‘Paying close attention’
State legal offices are taking a close look at the recent numbers. John Fougere, spokesman for Missouri Attorney General Jay Nixon, said there has been some discussion about the housing fallout in his office, and that there is significant concern about the situation. He said Nixon’s office isn’t currently doing an investigation into residential real-estate lending practices, but he encouraged Missouri consumers to contact the attorney general’s office if they suspect predatory lending.
“We’re looking into the issue and paying close attention to it,” Fougere said. “And if there is any omission or predatory practices, we’ll be ready to act aggressively to it.”
Kansas Attorney General Paul Morrison just announced that the state is creating a task force to look into the reasons behind home foreclosures, including mortgage fraud and subprime lending. Banking Commissioner Tom Thull will head the task force, which includes representatives from the lending and real-estate industries, and consumer advocates.
Melissa Dunson is the business writer for The Joplin Globe.
Then and now
For the Ozark Gateway Association of Realtors’ coverage area, the Multiple Listing Service reported 152 residential sales in September. The same service reported 265 sales in September 2006.
