Hold on to Your Home

The current foreclosure crisis unearthed a domino effect in mortgage lending that includes a vast and confusing array of problems from exotic loan products to questionable “income verification” processes for potential homebuyers. This has led to record numbers of mortgage foreclosures in Michigan and nationwide. It’s a problem that no one wants to own but will affect most of us in some financial way.

Even if you’re awash with equity living in a fixed-rate mortgaged home in an established community, your property value could depreciate due to a foreclosure in your neighborhood. Mortgage foreclosure is a problem in all income brackets and in all home price ranges. A foreclosure will, on average, lower property values by 1 percent for homes within the surrounding block.

“Just one foreclosure can have a devastating effect on a neighborhood—lowering surrounding property values, eroding the tax base and creating nuisance problems like unkempt lots and abandoned and unsafe structures,” said Eric Schertzing, Ingham County treasurer.

A great metric for measuring foreclosures is the number of sheriff sales in Ingham County. A few missed payments can trigger a sheriff sale. At the sale, the home loan is auctioned off, usually purchased by the financial company holding the note. Once this happens the homeowner has a six-month redemption period to pay the loan holder the full amount of the loan to keep the home. There were 600 sheriff sales in 2004. In 2005, there were 800. By 2006, the number rose to 1,300. It’s expected that the number will rise again for 2007 and peak in 2008.

This is why Schertzing and Lansing Mayor Virgil Bernero have decided to pool resources to help prevent local mortgage foreclosures through an initiative called Hold on to Your Home.

“Lansing has a lot at stake with the foreclosure epidemic that is taking place here,” said Bernero. “Families are hurting. Vacant properties could threaten our neighborhoods.” This pool of money supports Web tools for homeowners to help themselves, free counseling services, the 211 help line, and an awareness campaign to reach potential counseling candidates.

The goal of Hold on to Your Home is to be not only free, but also a safe alternative to a number of unscrupulous and predatory foreclosure assistance scams on the market where people are asked to pay fees, charged membership dues and even told to sign over their deeds with often bigger problems in the end. Homeowners in need can log onto www.holdontoyourhome.org or call 211 to access free, experienced homeownership counselors certified by the U.S. Department of Housing and Urban Development (HUD) and the Michigan State Housing Development Authority (MSHDA).

For people without Web access, simply dialing 211 can help a homeowner get in touch with a local counselor trained to help prevent foreclosure as well as minimize the damage caused by the foreclosure process, and get information about other support services like food or utilities.

Rather than simply reacting to the aftershock of this terrible problem, the City of Lansing and Ingham County are taking a proactive approach to help prevent as many local residents from facing this problem as possible. This is a great example of local leaders putting something meaningful in place for our citizens and protecting the long-term value of our homes and neighborhoods.

Lisa Smith is vice president of Donovan & Smith Marketing and Media Incorporated, an integrated marketing and public relations firm working with statewide and local clients on a wide range of topics including housing and other social marketing issues.

 

 

 

 

 

 

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