1 Foreclosures in Kalamazoo: Implications & Prevention

2 WHO TO CALL FOR MORTGAGE HELP? 211 call as soon as you think you might have a mortgage problem

3 A crisis in the US

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

5 Foreclosures In Michigan Realtytrac.com

6 UNDERSTANDING FORECLOSURE Day 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 Lender. Begin communication by contacting your Lender. Contact a MSHDA approved lender for refinance options. Contact a MSHDA approved lender for refinance options.

7 UNDERSTANDING FORECLOSURE Day 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 options?”). Negotiate a work out plan (“What are my options?”).

8 UNDERSTANDING FORECLOSURE Day 45 to 60 Lender attempts phone contact. Lender attempts phone contact. Lender sends “demand” or “breach” letter to the borrower pointing out that terms of the mortgage have been violated. Lender sends “demand” or “breach” letter to the borrower pointing out that terms of the mortgage have been violated. Once the “demand” letter goes out all delinquent payments are due. Partial payments are not accepted. Once the “demand” letter goes out all delinquent payments are due. Partial payments are not accepted.

9 UNDERSTANDING FORECLOSURE Day 90 to 105 Lender hires local attorney or other firm to initiate foreclosure proceedings. Lender hires local attorney or other firm to 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 local courthouse, details of the debt published in local paper for 4 consecutive weeks and notice posted on the home. Public Notification – Notice of Foreclosure at the local courthouse, details of the debt published in local paper for 4 consecutive weeks and notice posted on the home. Sheriff Sale – House sold at foreclosure sale or auction. Sheriff Sale – House sold at foreclosure sale or auction.

10 UNDERSTANDING FORECLOSURE Day 105 to 155 Title transferred subject to Redemption Rights of the owner. Title transferred subject to Redemption Rights of the owner. The “sheriff’s deed” list the last date the property can be redeemed. The “sheriff’s deed” list the last date the property can be redeemed. Redemption period is generally six months, but can be up to 12 months if property is over three acres or there is more than 50% equity in the property. Redemption period is generally six months, but can be up to 12 months if property is over three acres or there is more than 50% equity in the property. Warning: If you vacate the home the Lender can accelerate or shorten the redemption period. Warning: If you vacate the home the Lender can accelerate or shorten the redemption period.

11 UNDERSTANDING FORECLOSURE To get the property back you must pay: Mortgage + interest + last fee + court costs + attorney fees. Mortgage + interest + last fee + court costs + attorney fees.

12 UNDERSTANDING FORECLOSURE Redemption Period LIVE in the house LIVE in the house  No payment  Maintain utilities  Maintain insurance  General upkeep EVICTION – At the end of the Redemption Period you will receive an eviction notice. EVICTION – At the end of the Redemption Period you will receive an eviction notice. LEGAL NOTICE – You will be served with legal notice of action. You can appear in court. LEGAL NOTICE – You will be served with legal notice of action. You can appear in court. Date is set to actually have the Sheriff move your belongings to the curb. Date is set to actually have the Sheriff move your belongings to the curb. Source: Michigan State Housing Development Authority

13 UNDERSTANDING FORECLOSURE Call 211 first to understand the problem and resources Call 211 first to understand the problem and resources Or call your mortgage service provider and ask to speak to “Loss Mitigation Department” Or call your mortgage service provider and ask to speak to “Loss Mitigation Department”

14 Foreclosure in Michigan According to the Michigan Municipal League: 1 in 33 homes in the state will be foreclosed upon According to the Michigan Municipal League: 1 in 33 homes in the state will be foreclosed upon Joint Economic Committee estimated 24% of subprime loans in Michigan will go into foreclosure ( Joint Economic Committee estimated 24% of subprime loans in Michigan will go into foreclosure (

15 Foreclosure in Kalamazoo County According to Realtytrac.com: 695 properties in Kalamazoo County in foreclosure process now 695 properties in Kalamazoo County in foreclosure process now Of these, 462 have a “Kalamazoo” address (2 out of 3 in county) Of these, 462 have a “Kalamazoo” address (2 out of 3 in county) Majority of these are classified as “bank- owned” Majority of these are classified as “bank- owned”

16 Foreclosures in City of Kalamazoo

17 Foreclosures in City of Kalamazoo 1,143 foreclosures in City of Kalamazoo from January 1, 2005 – May 1, ,143 foreclosures in City of Kalamazoo from 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)

18 Foreclosures in City of Kalamazoo 1 out of 4 foreclosures in Kalamazoo is a rental property 1 out of 4 foreclosures in Kalamazoo is a rental property Tenants have very little rights in a foreclosure and often are given limited notice to move out Tenants have very little rights in a foreclosure and often are given limited notice to move out

19 The numbers point to more trouble ahead Median household income, $ (2000) USA$41,994 Michigan$44,647 Kalamazoo County$42,022 Kalamazoo City$31,189 Source: dataplace.org

20 The numbers point to more trouble ahead % of conventional mortgage loans by subprime lenders (2004) USA18.7% Michigan18.0% Kalamazoo County15.8% Kalamazoo City24.1% Source: dataplace.org

21 The numbers point to more trouble ahead % conventional refinancing mortgage loans by subprime lenders (2004) USA21.3% Michigan19.7% Kalamazoo County20.3% Kalamazoo City31.7% Source: dataplace.org

22 The numbers point to more trouble ahead Median borrower income for owner- occupied purchase (2005) USA$70,000 Michigan$57,000 Kalamazoo County$56,000 Kalamazoo City$43,000 Source: dataplace.org

23 Oakwood and S. Westnedge areas In the city, foreclosed property is in specific neighborhoods Oakwood and S. Westnedge areas Source: RealtyTrac.com

24 Northside Source: RealtyTrac.com

25 Edison Source: RealtyTrac.com

26 Eastside Source: RealtyTrac.com

27 IMPACT ON SURROUNDING PROPERTIES

28 Examples of Foreclosure Pushing Down Values Assessor’s Cash Value = $33,000 Assessor’s Cash Value = $33,000 Currently for sale by bank: $8,900 Currently for sale by bank: $8,900 Assessor’s Cash Value = $56,000 Assessor’s Cash Value = $56,000 Currently for sale by bank: $7,900 Currently for sale by bank: $7,900

29 CHANGE IN ANNUAL RESIDENTIAL ASSESSED VALUES

30 Although Residential Assessed values are expected to decline, overall TAXABLE values are still expected to rise in 2009 Although Residential Assessed values are expected to decline, overall TAXABLE values are still expected to rise in 2009 This is because some properties have a taxable value which is less then the assessed value This is because some properties have a taxable value which is less then the assessed value The taxable value must continue to rise at rate of inflation until it catches up with the assessed value The taxable value must continue to rise at rate of inflation until it catches up with the assessed value

31 Kalamazoo Area Foreclosure Prevention Partnership City of Kalamazoo Greater Kalamazoo United Way Housing Resources, Inc. Kalamazoo County Kalamazoo Neighborhood Housing Services Legal Aid of Western Michigan Local Initiatives Support Corporation Northside Association for Community Develpmnt. State of Michigan Department of Human Services

32 Kalamazoo Area Foreclosure Prevention Partnership Working together: Coordinate services Coordinate services Coordinate and increase funding Coordinate and increase funding Mortgage counseling & negotiations w/ lenders Mortgage counseling & negotiations w/ lenders Provide education to public and agencies Provide education to public and agencies Identify issues and opportunities Identify issues and opportunities

33 Kalamazoo Area Foreclosure Prevention Partnership 211 = first place to call 211 = first place to call KNHS = mortgage counseling KNHS = mortgage counseling DHS = emergency financial assistance DHS = emergency financial assistance Legal Aid = legal assistance Legal Aid = legal assistance HRI = Transitional shelter HRI = Transitional shelter

34 Counseling Does Work Lighthouse Community Development Corporation (Pontiac, MI) Average cost of helping a client avoid foreclosure through the Lighthouse program is $910 Average cost of helping a client avoid foreclosure through the Lighthouse program is $910 Average cost to society of a mortgage foreclosure is $22,330 Average cost to society of a mortgage foreclosure is $22,330 Average cost to the investor is $50,000- $60,000 Average cost to the investor is $50,000- $60,000

35 AVOID SCAMS Be wary of anyone who calls or stops by your home with an offer too good to be true. Predatory buyers or scam artists may pretend to help you. What they really want is your property.

36 AVOID SCAMS Look out for someone who… seeks you out to “solve” your financial problems seeks you out to “solve” your financial problems pressures you to make a quick decision pressures you to make a quick decision demands large up-front fees demands large up-front fees tells you not to contact your current lender or bank tells you not to contact your current lender or bank tells you not to contact a lawyer tells you not to contact a lawyer asks you to sign papers without giving you a chance to read them asks you to sign papers without giving you a chance to read them asks you to sign papers with blank spaces asks you to sign papers with blank spaces asks you to sign a deed asks you to sign a deed offers to file bankruptcy for you offers to file bankruptcy for you Source: Washtenaw County Treasurer

37 Tax foreclosure versus Bank foreclosure County treasurer does tax foreclosure in spring of each year County treasurer does tax foreclosure in spring of each year Taxes which are 2 years delinquent Taxes which are 2 years delinquent In December of ,000 parcels in the county were to be tax foreclosed on in March In December of ,000 parcels in the county were to be tax foreclosed on in March As of March 31, 2008 the County foreclosed on 107 properties of which 9 are homesteads. As of March 31, 2008 the County foreclosed on 107 properties of which 9 are homesteads.

38 Tax foreclosure versus Bank foreclosure County assistance through direct outreach to delinquent taxpayers County assistance through direct outreach to delinquent taxpayers Helped delinquent taxpayers by setting up a payment plan. Minimum payment = $50 per month. Helped delinquent taxpayers by setting up a payment plan. Minimum payment = $50 per month. County gave taxpayers poverty exemption form County gave taxpayers poverty exemption form

39 Available to low income homeownersAvailable to low income homeowners Senior citizens pay no more than 3% of their income, after homestead credit rebate from the State, for property taxesSenior citizens pay no more than 3% of their income, after homestead credit rebate from the State, for property taxes Citizens under age 65 pay no more than 5% of their income, after homestead credit rebate from the State, for property taxesCitizens under age 65 pay no more than 5% of their income, after homestead credit rebate from the State, for property taxes

40 CONTACT THE KALAMAZOO CITY ASSESSOR’S OFFICE FOR APPLICATION & GUIDELINES

41 WHO TO CALL FOR MORTGAGE HELP? 211 call as soon as you think you might have a mortgage problem

42 Prepared by: City of Kalamazoo Community Planning & Development Department Sources: Kalamazoo Vice Mayor Hannah McKinney Kalamazoo County Treasurer Mary Balkema other sources as noted June 30, 2008

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