Metro area 6th in foreclosures In first quarter, 1 in 120 homes was in default; Indy ranks first

Sarah Ryley / The Detroit News/ May 23, 2006

DETROIT -- Metro Detroit ranks sixth among U.S. metropolitan areas in the percentage of homes in some stage of foreclosure, according to a new study to be released today.

One out of 120 Metro Detroit homes was in foreclosure in the first quarter of 2006 because their owners fell behind on payments, according to the 2006 U.S. Metropolitan Foreclosure Market Report, which ranked the nation's 100 metropolitan areas.
The study by RealtyTrac, an online marketplace for foreclosed properties, is another sign that Metro Detroit's battered economy is taking a heavy toll on residents.

Some real estate professionals say the situation may get worse in the coming months.

"None of the people in this market knows what their future is going to be," said Bob Mackenzie, a foreclosure specialist for Real Estate One in St. Clair Shores.

Mackenzie said he expects southeast Michigan's real estate market to "bottom out" after the United Auto Workers and supplier Delphi Corp. reach an agreement in their current labor dispute, because it will drive down wages in the region.

Metro Detroit was topped by Indianapolis, Atlanta, Dallas-Fort Worth, Memphis, Tenn., and Denver.
In Indianapolis, one in 69 homes was in foreclosure. Because of the Detroit region's size, it ranks third in the number of homes in foreclosure --18,402 in the first quarter.

"It's directly the result of Ford, GM and Chrysler," said Bob Schneider, an agent for Real Estate One in Troy who deals mainly with foreclosed properties.

"I knock on these doors and it's, 'I lost my job, I lost my job, I lost my " job.'
Michigan's unemployment rate has risen for the third straight month, to 7.2 percent, well above the national average of 4.7 percent, largely due to struggles in the auto industry.

Although Wayne County has long led the nation in foreclosures, in part due to mortgage fraud, foreclosures in Oakland and Macomb counties have been steadily increasing for the past three years, Mackenzie said.

"There are about 75 (homes) that go into foreclosure every Tuesday in Oakland and 60 to 65 every Friday in Macomb," Schneider said.
When people lose their homes to foreclosure, everybody on the block is affected.

"When the banks gets these homes back, typically they don't spend a lot to maintain them and they sell them for a lower price than the occupied homes," decreasing property values, and equity, for everyone, Mackenzie said.

Patrick Anderson, founder of Anderson Economic Group in Lansing, a consulting firm, said the fact that the Detroit Metro region has a lower foreclosure rate than more prosperous regions such as Denver "indicates some of that resilience of Detroiters during tough economic times."

"Michigan citizens have endured more ups and downs, and that has led them to be more conservative about their investments," Anderson said.

Patrick Gibbard, a loan officer for the Prime Financial Group Inc. in Lake Orion, suggested homeowners look into options such as a 40-year mortgage to help fend of foreclosure if they find themselves in a situation where they can't make their payments.

Otherwise, he said, borrowers often find themselves in a more difficult situation when late fees, higher minimum payments and higher interest rates, due to a lowered credit score, pile up.

According to the RealtyTrac study, several Gulf Coast cities -- New Orleans; Mobile, Ala.; Baton Rouge, La.; and Jackson, Miss. -- documented foreclosure rates among the nation's 10 lowest because many defaulted properties in the region are protected by a foreclosure moratorium imposed by the U.S. Department of Housing and Urban Development because of Hurricane Katrina.

You can reach Sarah Ryley at (313) 222-2536 or sryley@detnews.com