1 foreclosures in kalamazoo: implications & prevention

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Foreclosures in Kalamazoo:Foreclosures in Kalamazoo:Implications & PreventionImplications & Prevention

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WHO TO CALL FOR WHO TO CALL FOR MORTGAGE HELP?MORTGAGE HELP?

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call as soon as you think you call as soon as you think you might have a mortgage might have a mortgage

problemproblem

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A crisis in the USA crisis in the US

4 Source: John Kromer, Senior Consultant, Fels Institute of Government (for the National Vacant Properties Campaign)

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Foreclosures In MichiganForeclosures In Michigan

Realtytrac.com

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UNDERSTANDING UNDERSTANDING FORECLOSUREFORECLOSURE

Day 1 to 15Day 1 to 15 Payments due on the 1st.Payments due on the 1st. Late fee after the 15th day.Late fee after the 15th day.

Begin communication by contacting your Begin communication by contacting your Lender.Lender.

Contact a MSHDA approved lender for Contact a MSHDA approved lender for refinance options.refinance options.

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Day 16 to 30Day 16 to 30 Late charges are assessed.Late charges are assessed. Loan is in default at 30 days.Loan is in default at 30 days. Lender sends notice of delinquency.Lender sends notice of delinquency.

Negotiate a work out plan (“What are my Negotiate a work out plan (“What are my options?”).options?”).

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Day 45 to 60Day 45 to 60 Lender attempts phone contact.Lender attempts phone contact. Lender sends “demand” or “breach” letter Lender sends “demand” or “breach” letter

to the borrower pointing out that terms of to the borrower pointing out that terms of the mortgage have been violated.the mortgage have been violated.

Once the “demand” letter goes out Once the “demand” letter goes out allall delinquent payments are due. Partial delinquent payments are due. Partial payments are not accepted.payments are not accepted.

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Day 90 to 105Day 90 to 105 Lender hires local attorney or other firm to Lender hires local attorney or other firm to

initiate foreclosure proceedings.initiate foreclosure proceedings. Adds about $1,500 to $2,500 to your costs.Adds about $1,500 to $2,500 to your costs. Interest continues to accumulate.Interest continues to accumulate. Public Notification – Notice of Foreclosure at the Public Notification – Notice of Foreclosure at the

local courthouse, details of the debt published in local courthouse, details of the debt published in local paper for 4 consecutive weeks and notice local paper for 4 consecutive weeks and notice posted on the home.posted on the home.

Sheriff Sale – House sold at foreclosure sale or Sheriff Sale – House sold at foreclosure sale or auction.auction.

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Day 105 to 155Day 105 to 155 Title transferred subject to Redemption Rights of Title transferred subject to Redemption Rights of

the owner.the owner. The “sheriff’s deed” list the last date the property The “sheriff’s deed” list the last date the property

can be redeemed.can be redeemed. Redemption period is generally six months, but Redemption period is generally six months, but

can be up to 12 monthscan be up to 12 months if property is over three if property is over three acres or there is more than 50% equity in the acres or there is more than 50% equity in the property.property.

WarningWarning: If you vacate the home the Lender can : If you vacate the home the Lender can accelerate or shorten the redemption period.accelerate or shorten the redemption period.

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To get the property back To get the property back

you must pay:you must pay: Mortgage + interest + last fee + court Mortgage + interest + last fee + court

costs + attorney fees.costs + attorney fees.

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Redemption PeriodRedemption Period LIVELIVE in the house in the house

No paymentNo payment Maintain utilitiesMaintain utilities Maintain insuranceMaintain insurance General upkeepGeneral upkeep

EVICTIONEVICTION – At the end of the Redemption Period you – At the end of the Redemption Period you will receive an will receive an evictioneviction notice. notice.

LEGAL NOTICELEGAL NOTICE – You will be served with legal notice of – You will be served with legal notice of action. You can appear in court.action. You can appear in court.

Date is set to actually have the Sheriff move your Date is set to actually have the Sheriff move your belongings to the curb.belongings to the curb.

Source: Michigan State Housing Development Authority

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Call 211Call 211 first to understand the first to understand the problem and resourcesproblem and resources

Or call your mortgage service Or call your mortgage service provider and ask to speak to provider and ask to speak to “Loss “Loss Mitigation Department”Mitigation Department”

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Foreclosure in MichiganForeclosure in Michigan

According to the Michigan Municipal According to the Michigan Municipal League: 1 in 33 homes in the state will be League: 1 in 33 homes in the state will be foreclosed upon foreclosed upon

Joint Economic Committee estimated 24% Joint Economic Committee estimated 24% of subprime loans in Michigan will go into of subprime loans in Michigan will go into foreclosure foreclosure (http://jec.senate.gov/Documents/Reports/10.25.07OctoberSubprimeReport.pdf(http://jec.senate.gov/Documents/Reports/10.25.07OctoberSubprimeReport.pdf

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Foreclosure in Kalamazoo Foreclosure in Kalamazoo CountyCounty

According to Realtytrac.com: According to Realtytrac.com:

695 properties in Kalamazoo County in 695 properties in Kalamazoo County in foreclosure process nowforeclosure process now

Of these, 462 have a “Kalamazoo” Of these, 462 have a “Kalamazoo” address (2 out of 3 in county)address (2 out of 3 in county)

Majority of these are classified as “bank-Majority of these are classified as “bank-owned”owned”

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Foreclosures in City of Foreclosures in City of KalamazooKalamazoo

Sherriff's Deeds

270

331

448

050

100150200250300350400450500

2005 2006 2007

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1,143 foreclosures in City of Kalamazoo 1,143 foreclosures in City of Kalamazoo from January 1, 2005 – May 1, 2008from January 1, 2005 – May 1, 2008

Top 4 foreclosing banks:Top 4 foreclosing banks: MERS (157)MERS (157) Deutsche Bank (136)Deutsche Bank (136) US Bank (95)US Bank (95) Wells Fargo (94)Wells Fargo (94)

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1 out of 4 foreclosures in Kalamazoo is a 1 out of 4 foreclosures in Kalamazoo is a rental propertyrental property

Tenants have very little rights in a Tenants have very little rights in a foreclosure and often are given limited foreclosure and often are given limited notice to move outnotice to move out

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The numbers point to more The numbers point to more trouble aheadtrouble ahead

Median household income, $ (2000)

USA $41,994 Michigan $44,647 Kalamazoo County $42,022 Kalamazoo City $31,189

Source: dataplace.org

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% of conventional mortgage loans by subprime lenders (2004)

USA 18.7% Michigan 18.0% Kalamazoo County 15.8% Kalamazoo City 24.1%


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% conventional refinancing mortgage loans by subprime lenders (2004)

USA 21.3% Michigan 19.7% Kalamazoo County 20.3% Kalamazoo City 31.7%


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Median borrower income for owner-occupied purchase (2005)

USA $70,000 Michigan $57,000 Kalamazoo County $56,000 Kalamazoo City $43,000


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In the city, foreclosed property is in specific neighborhoods Oakwood and S. Westnedge Oakwood and S. Westnedge

areasareas

Source: RealtyTrac.com

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NorthsideNorthside


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EdisonEdison


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EastsideEastside


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IMPACT ON SURROUNDING IMPACT ON SURROUNDING PROPERTIESPROPERTIES

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Examples of ForeclosureExamples of ForeclosurePushing Down ValuesPushing Down Values

Assessor’s Cash Value = $33,000Assessor’s Cash Value = $33,000 Currently for sale by bank: $8,900Currently for sale by bank: $8,900

Assessor’s Cash Value = $56,000Assessor’s Cash Value = $56,000 Currently for sale by bank: $7,900Currently for sale by bank: $7,900

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CHANGE IN ANNUAL CHANGE IN ANNUAL RESIDENTIAL ASSESSED RESIDENTIAL ASSESSED

VALUESVALUES

% change

5.8 65.2

2.82.2

-3.1-4

-2

0

2

4

6

8

2004 2005 2006 2007 2008 prelim.2009 est

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Although Residential Assessed values are Although Residential Assessed values are expected to decline, overall TAXABLE values expected to decline, overall TAXABLE values are still expected to rise in 2009are still expected to rise in 2009

This is because some properties have a taxable This is because some properties have a taxable value which is less then the assessed valuevalue which is less then the assessed value

The taxable value must continue to rise at rate of The taxable value must continue to rise at rate of inflation until it catches up with the assessed inflation until it catches up with the assessed valuevalue

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Kalamazoo Area Foreclosure Kalamazoo Area Foreclosure Prevention PartnershipPrevention Partnership

City of KalamazooCity of KalamazooGreater Kalamazoo United WayGreater Kalamazoo United Way

Housing Resources, Inc.Housing Resources, Inc.Kalamazoo CountyKalamazoo County

Kalamazoo Neighborhood Housing ServicesKalamazoo Neighborhood Housing ServicesLegal Aid of Western MichiganLegal Aid of Western Michigan

Local Initiatives Support CorporationLocal Initiatives Support CorporationNorthside Association for Community Develpmnt.Northside Association for Community Develpmnt.State of Michigan Department of Human ServicesState of Michigan Department of Human Services

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Working together:Working together:

Coordinate servicesCoordinate services Coordinate and increase fundingCoordinate and increase funding Mortgage counseling & negotiations w/ lendersMortgage counseling & negotiations w/ lenders Provide education to public and agenciesProvide education to public and agencies Identify issues and opportunitiesIdentify issues and opportunities

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211 = first place to call211 = first place to call KNHS = mortgage counselingKNHS = mortgage counseling DHS = emergency financial assistanceDHS = emergency financial assistance Legal Aid = legal assistanceLegal Aid = legal assistance HRI = Transitional shelterHRI = Transitional shelter

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Counseling Does WorkCounseling Does Work

Lighthouse Community Development Lighthouse Community Development Corporation (Pontiac, MI)Corporation (Pontiac, MI)

Average cost of helping a client avoid Average cost of helping a client avoid foreclosure through the Lighthouse foreclosure through the Lighthouse program is program is $910$910

Average cost to society of a mortgage Average cost to society of a mortgage foreclosure is foreclosure is $22,330$22,330

Average cost to the investor is Average cost to the investor is $50,000-$50,000-$60,000$60,000

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AVOID SCAMSAVOID SCAMS

Be wary of anyone who calls or stops by Be wary of anyone who calls or stops by your home with an offer too good to be your home with an offer too good to be true. true.

Predatory buyers or scam artists may Predatory buyers or scam artists may pretend to help you. What they really want pretend to help you. What they really want is your property. is your property.

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AVOID SCAMSAVOID SCAMS

Look out for someone who…Look out for someone who…

seeks you out to “solve” your financial problemsseeks you out to “solve” your financial problems pressures you to make a quick decisionpressures you to make a quick decision demands large up-front feesdemands large up-front fees tells you not to contact your current lender or banktells you not to contact your current lender or bank tells you not to contact a lawyertells you not to contact a lawyer asks you to sign papers without giving you a chance to read asks you to sign papers without giving you a chance to read

themthem asks you to sign papers with blank spacesasks you to sign papers with blank spaces asks you to sign a deedasks you to sign a deed offers to file bankruptcy for youoffers to file bankruptcy for you

Source: Washtenaw County Treasurer

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Tax foreclosure versus Bank Tax foreclosure versus Bank foreclosureforeclosure

County treasurer does tax foreclosure in spring County treasurer does tax foreclosure in spring of each yearof each year

Taxes which are 2 years delinquentTaxes which are 2 years delinquent In December of 2007 1,000 parcels in the county In December of 2007 1,000 parcels in the county

were to be tax foreclosed on in Marchwere to be tax foreclosed on in March As of March 31, 2008 the County foreclosed on As of March 31, 2008 the County foreclosed on

107 properties of which 9 are homesteads.107 properties of which 9 are homesteads.

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Tax foreclosure versus Bank Tax foreclosure versus Bank foreclosureforeclosure

County assistance through direct County assistance through direct outreach to delinquent taxpayersoutreach to delinquent taxpayers

Helped delinquent taxpayers by setting up Helped delinquent taxpayers by setting up a payment plan. Minimum payment = $50 a payment plan. Minimum payment = $50 per month.per month.

County gave taxpayers poverty exemption County gave taxpayers poverty exemption formform

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• Available to low income homeownersAvailable to low income homeowners

• Senior citizens pay no more than 3% of their Senior citizens pay no more than 3% of their income, after homestead credit rebate from the income, after homestead credit rebate from the State, for property taxesState, for property taxes

• Citizens under age 65 pay no more than 5% of Citizens under age 65 pay no more than 5% of their income, after homestead credit rebate from their income, after homestead credit rebate from the State, for property taxesthe State, for property taxes

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CONTACT THE KALAMAZOO CITY CONTACT THE KALAMAZOO CITY ASSESSOR’S OFFICE FOR ASSESSOR’S OFFICE FOR

APPLICATION & GUIDELINESAPPLICATION & GUIDELINES

337-8011337-8011

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WHO TO CALL FOR WHO TO CALL FOR MORTGAGE HELP?MORTGAGE HELP?

211211

call as soon as you think you call as soon as you think you might have a mortgage might have a mortgage

problemproblem

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Prepared by:Prepared by:City of KalamazooCity of Kalamazoo

Community Planning & Development DepartmentCommunity Planning & Development Department

Sources:Sources:Kalamazoo Vice Mayor Hannah McKinneyKalamazoo Vice Mayor Hannah McKinney

Kalamazoo County Treasurer Mary BalkemaKalamazoo County Treasurer Mary Balkemaother sources as notedother sources as noted

June 30, 2008June 30, 2008