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Homeowners paying for mortgage woes
By Gene Hanson
When U.S. Treasury Secretary Henry Paulson came to Kansas City recently to discuss what homeowners threatened with foreclosure could do to save themselves, he said Kansas City had a “high level of foreclosures.”
The remark stunned many in the packed audience who turned out for the meeting. But his remark was not far off the mark.
Missouri now ranks No. 13 in the country in home foreclosures, according to Realtytrac.com, a national firm that tracks home foreclosures. It was ranked No. 14 in October. The dubious distinction gives that much more credence to what Paulson was saying.
According to the Recorder of Deeds offices for Clay and Platte counties, foreclosures in 2007 were the highest on record. There were 873 in Clay and 246 in Platte.
Those kinds of numbers exact a heavy price on values.
The Center for Responsible Lending reports that in Clay County, 816 homes with 2005/2006 subprime mortgages have been foreclosed on. More than 27,000 nearby homes have lost value because of it, and the average loss is estimated at $1,195 per home. At the same time, the decrease in the county tax base is estimated at $32.9 million.
In Platte County, the numbers look like this: 249 homes foreclosed on; 6,210 nearby homes negatively affected; average loss per home, $1,620; loss in county tax base, $10 million.
In addition, Kansas City might not have been as insulated from the subprime mortgage meltdown as some have thought.
There are more than 34,000 adjustable-rate mortgages in Kansas City, the culprit in the subprime mortgage mess, that are due to reset to a higher interest rate this year, according to CRL. It also says that one in five subprime mortgages will end in foreclosure, the highest rate since the Great Depression.
The CRL said there were several factors that drove subprime foreclosures, including adjustable-rate mortgages with steep built-in rate and payment increases, prepayment penalties, limited income documentation, and no escrow for taxes and insurance. Collectively, they cause a higher risk of default regardless of the borrower’s credit score.
According to Realtytrac.com, 111 homeowners in Clay County were sent notices of default in November; notices of trustee sales were posted for four others; and 29 were listed as owned by banks.
In Platte County in November, two notices of trustee sales were posted, and 25 homes were listed as repossessed by banks.
According to Realtytrac.com, Clay County ranks No. 5 in Missouri for the number of homes in some state of foreclosure, including pre-foreclosure, foreclosure, for sale by owner and repossessed by banks. Platte County ranks No. 10.
“I think the foreclosure problem is going to get worse before it gets better,” Kelly Edmiston, senior economist at the Federal Reserve Bank of Kansas City, told a foreclosure forum sponsored by the Federal Reserve Bank and the Mid America Assistance Coalition.
The Federal Reserve Bank of Kansas City district covers seven states, and the counties within the district with the highest foreclosure rates are around Denver and Kansas City.
Edmiston said the foreclosure rate in Missouri was 1.12 percent, that’s below the national foreclosure rate of 1.4 percent.
“Foreclosures are concentrated in urban areas, specifically in low-and-moderate income areas,” he said. “While foreclosures rates in rural areas in both Kansas and Missouri are generally lower.”
But the overall impact of the subprime mortgage meltdown will be costly. Up to half of the 450,000 families in the country with subprime adjustable rate mortgages will lose their homes in the next three months when interest rates reset, according to the CRL.
It also said 24 states would lose more than $1 billion each in local house prices and tax bases because of subprime foreclosures.
The numbers:
- Missouri ranks 13th in the nation for the number of home foreclosures.
- Subprime home foreclosures in Clay County will negatively affect the value of 27,603 nearby homes and decrease the county’s tax base by $32.9 million.
- Subprime home foreclosures in Platte County will negatively affect 6,210 nearby homes and decrease the county’s tax base by $10 million.
Business Editor Gene Hanson can be reached at 389-6638 or ghanson@npgco.com.
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The remark stunned many in the packed audience who turned out for the meeting. But his remark was not far off the mark.
Missouri now ranks No. 13 in the country in home foreclosures, according to Realtytrac.com, a national firm that tracks home foreclosures. It was ranked No. 14 in October. The dubious distinction gives that much more credence to what Paulson was saying.
According to the Recorder of Deeds offices for Clay and Platte counties, foreclosures in 2007 were the highest on record. There were 873 in Clay and 246 in Platte.
Those kinds of numbers exact a heavy price on values.
The Center for Responsible Lending reports that in Clay County, 816 homes with 2005/2006 subprime mortgages have been foreclosed on. More than 27,000 nearby homes have lost value because of it, and the average loss is estimated at $1,195 per home. At the same time, the decrease in the county tax base is estimated at $32.9 million.
In Platte County, the numbers look like this: 249 homes foreclosed on; 6,210 nearby homes negatively affected; average loss per home, $1,620; loss in county tax base, $10 million.
In addition, Kansas City might not have been as insulated from the subprime mortgage meltdown as some have thought.
There are more than 34,000 adjustable-rate mortgages in Kansas City, the culprit in the subprime mortgage mess, that are due to reset to a higher interest rate this year, according to CRL. It also says that one in five subprime mortgages will end in foreclosure, the highest rate since the Great Depression.
The CRL said there were several factors that drove subprime foreclosures, including adjustable-rate mortgages with steep built-in rate and payment increases, prepayment penalties, limited income documentation, and no escrow for taxes and insurance. Collectively, they cause a higher risk of default regardless of the borrower’s credit score.
According to Realtytrac.com, 111 homeowners in Clay County were sent notices of default in November; notices of trustee sales were posted for four others; and 29 were listed as owned by banks.
In Platte County in November, two notices of trustee sales were posted, and 25 homes were listed as repossessed by banks.
According to Realtytrac.com, Clay County ranks No. 5 in Missouri for the number of homes in some state of foreclosure, including pre-foreclosure, foreclosure, for sale by owner and repossessed by banks. Platte County ranks No. 10.
“I think the foreclosure problem is going to get worse before it gets better,” Kelly Edmiston, senior economist at the Federal Reserve Bank of Kansas City, told a foreclosure forum sponsored by the Federal Reserve Bank and the Mid America Assistance Coalition.
The Federal Reserve Bank of Kansas City district covers seven states, and the counties within the district with the highest foreclosure rates are around Denver and Kansas City.
Edmiston said the foreclosure rate in Missouri was 1.12 percent, that’s below the national foreclosure rate of 1.4 percent.
“Foreclosures are concentrated in urban areas, specifically in low-and-moderate income areas,” he said. “While foreclosures rates in rural areas in both Kansas and Missouri are generally lower.”
But the overall impact of the subprime mortgage meltdown will be costly. Up to half of the 450,000 families in the country with subprime adjustable rate mortgages will lose their homes in the next three months when interest rates reset, according to the CRL.
It also said 24 states would lose more than $1 billion each in local house prices and tax bases because of subprime foreclosures.
The numbers:
- Missouri ranks 13th in the nation for the number of home foreclosures.
- Subprime home foreclosures in Clay County will negatively affect the value of 27,603 nearby homes and decrease the county’s tax base by $32.9 million.
- Subprime home foreclosures in Platte County will negatively affect 6,210 nearby homes and decrease the county’s tax base by $10 million.
Business Editor Gene Hanson can be reached at 389-6638 or ghanson@npgco.com.