Foreclosures rise again despite best efforts

Fri, Apr 30, 2010


Business First of Columbus – by Kevin Kemper

Homeownership in Central Ohio has continued its dramatic erosion this year as another wave of foreclosures washes over the region.

Despite the improving economy and the best efforts of homeowner-assistance programs, 3,714 foreclosure lawsuits were filed in the eight-county Columbus region in the first quarter, up 5.4 percent from a year ago.

In fact, the quarter was the second-worst since the courts began closely tracking foreclosure filings in 1997, despite this being year five of the housing shakeout. The worst was the first quarter of 2008, when a little more than 3,800 homes were foreclosed on in Delaware, Fairfield, Franklin, Licking, Madison, Morrow, Pickaway and Union counties.

“I think we’re getting busier as the year goes on,” said Meryl Van Fleet, a housing counselor with Columbus-based Homes on the Hill Community Development Corp., a nonprofit that provides foreclosure assistance.

‘Staggering’ numbers

While the number of homes going into foreclosure across the Columbus region has risen every year since 1997, the brunt of the crisis hit in 2006 when filings rose 32 percent.

Before the crisis, Homes on the Hill primarily counseled low- to moderate-income households facing foreclosure. But Van Fleet said the past few years have proven to be much different.

“We’ve seen everything,” she said. “Homeowners who have anywhere from a $40,000 property value up to million-dollar homes.”

Across the state, the situation is no better, said Kimberly Zurz, director of the Ohio Department of Commerce, which is leading the state’s Save The Dream initiative to help Ohioans facing foreclosure.

“We’re continuing to see (filings) grow,” Zurz said. “I think our program has helped to keep it at a lower growth rate, but the number itself is still pretty staggering.”

A little more than 89,000 foreclosure lawsuits made their way through the state’s courts last year, a 3.8 percent increase from 2008.

Foreclosures have nearly tripled from the 31,000 filings logged statewide in 1999.

Warming to auctions
With its primary footprint in Ohio, Michigan and Florida, Fifth Third Bancorp has been busy with defaults because each of those states has been hurt economically, said Michele McCoy, a vice president in charge of default loan servicing at the Cincinnati-based bank.

“Our inventory of foreclosure has probably doubled in the last year,” she said.

“The unemployment rate has to go down significantly” before Fifth Third expects much change, McCoy said. “Ohio is one of those hard-hit states that is going to feel the effect of this for awhile.”

With no immediate end in sight, those who deal with foreclosed properties said they’re using new strategies to get them off the books.

Ohio Real Estate Auctions LLC out of Xenia held an April 22 auction at the Embassy Suites Hotel in Dublin to liquidate 11 properties in the northwest suburbs valued between $100,000 and $400,000 each.

Banks typically sell foreclosed properties worth more than $100,000 through a Realtor, said Kay Barnett, a real estate agent with the firm. Ohio Real Estate Auctions expects that to change, she said.

“We’re trying to show the banks that we can liquidate quickly and get top dollar,” Barnett said.

Properties sold for between $120,000 and $360,000 at the Dublin auction, which attracted more than 250 potential buyers. The sale netted client Huntington National Bank about 87 percent of what it was owed, Barnett said

“The banks are flush with property and they don’t want any more of it,” said Rich Kruse, president of Gryphon USA Ltd., a Lewis Center-based company that auctions properties and also is seeing more foreclosure business from banks.

Some Gryphon clients are agreeing to absolute auctions, meaning there is no minimum bid, which Kruse said was unprecedented.

Fifth Third’s McCoy is not a big believer in auctions but acknowledges that the bank has used them.

“Historically, the perception of the auction is that it’s used as a last-ditch effort,” she said. “The perception is now that it can be another venue for creative disposition.”

Looking to the legislature
As banks try to get rid of growing portfolios of foreclosed homes, counseling agencies such as Homes on the Hill are doing their best on the front end to prevent foreclosure by working with banks on loan modifications, said Ellen Bardeen, Homes on the Hill’s housing counseling program manager.

The difficulty, she said, is that much of Homes on the Hill’s foreclosure prevention funding comes from grants that can run out.

“Last year for fiscal ’09, we had four full-time counselors and now we’re down to two,” Bardeen said.

Zurz thinks legislation could be the answer.

Ohio House Bill 3, a foreclosure bill introduced last year, would require plaintiffs to pay a $750 filing fee for every mortgage foreclosure action they file.

That money would be used to fund foreclosure prevention efforts, Zurz said.

Although the bill has passed the state House of Representatives, it has not advanced since being introduced last May in the Ohio Senate.

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