Federal help coming to deal with vacant homes

By SCOTT SMITH
Tribune staff writer

November 10, 2008 11:23 pm

— The downside of foreclosure is on full display at the Holiday Inn Express on a clear October day.
Auctioneers from Dallas-based Hudson & Marshall have six homes on the block today, bank-owned repossessions from Marion, Bunker Hill, Sharpsville and Kokomo.
The bids fly in and the gavel slams, and all six homes are disposed of in a little more than 10 minutes.
Winning bids range from $5,000 for a home in Bunker Hill with no picture or square footage listed in the auction catalogue, to $22,500 for a home in the 800 block of Westminster Lane.
The bidders all have their reasons for being there.
Dan Dumoulin II, who submitted the winning bid on Westminster, said the house is adjacent to one his family has.
“I need to give him something to do,” Dumoulin II joked, pointing his thumb at his father, Dan Sr.
Another woman, who purchased a home in Marion for $16,000, said she’s buying it for her brother, who receives regular treatment at the nearby Veterans Affairs hospital.
“It’s risky now [for landlords]; there are a lot of homes out there,” said Sharpsville landlord Barbie Fernung. “But for someone who wants to live in it, it’s well worth it. You’ve got to buy when things are bad.”
Things are definitely bad in the Kokomo area right now. Four years ago, 423 Howard County homes went into foreclosure. This year, mortgage foreclosure filings are expected to top 900.
Of close to 1,000 homes on the market in the Kokomo area, 40 percent are available through foreclosure, according to the Realtors Association of Central Indiana.
The homes going to auction last month had all been through the entire process. They’d been offered up at sheriff’s sale, and when the bids didn’t come in high enough, banks owning the homes bought the homes back.
That’s how the homes ended up at the Hudson & Marshall auction, where owners Wells Fargo, Citibank and Fannie Mae were trying to unload the properties.
Hudson auctioneer John Leggett said more and more properties have been sold at similar auctions in recent years as banks see foreclosures piling up.
“All the sales are subject to seller confirmation, but in this type of market, [the banks] have got to get rid of properties,” Leggett said. “Their inventories are growing at an astronomical rate.
“The holding costs right now are killing them. Cut your losses and run — that’s what you’re seeing right now.”
Leggett estimated that prior to the foreclosure crisis, about 50 percent of auction sales were to individuals interested in living in the homes. Now, he estimated, about 75 percent of the auctioned homes are going to investors.
Finding a buyer
The problem facing Congress right now is how to:
• find homeowners whose mortgages can be saved;
• and find financial institutions willing to work with those homeowners.
When neither of those goals happens, despite the billions Congress has already allotted toward insuring troubled mortgages and helping banks write down the principal owed, homes end up on the block.
U.S. Rep. Joe Donnelly, D-Ind., said Congress will conduct hearings Wednesday, zeroing in on hedge funds which were supposed to buy into the $300 billion Housing and Economic Recovery Act funding passed in July.
“We don’t feel they’ve been helping us enough with our goal to help keep homeowners in their homes,” Donnelly said.
More work is scheduled for the week of Nov. 17 when Congress will examine what’s being done with the $700 billion “rescue plan” passed last month. Again, Donnelly said he wants to know how those funds are being used to help struggling homeowners.
“Obviously someone making $20,000 a year can’t stay in a half-million-dollar home, but our goal is to, as much as possible, find situations that can work, and where there’s a chance to make a mortgage work, our goal is to make it work for the homeowner,” Donnelly said.
Homeowners with questions on available programs to help refinance mortgages and avoid foreclosure are being directed to a hotline at the U.S. Department of Housing and Urban Development, (800) 225-5342.
Scott Smith may be reached at (765) 454-8569 or via e-mail at scott.smith@kokomotribune.com

Howard County mortgage foreclosure filings:
2004: 435
2005: 543
2006: 783
2007: 862
2008: 669*
* As of Oct. 28

Copyright © 1999-2008 cnhi, inc.