Thursday, December 09, 2004

Ohioans have more mortgage problems than others

Associated Press, The Miami Herald

Ohioans, and particularly those who live in Cleveland, have more problems paying their mortgages on time than homeowners in any other state, two new reports show.

A Mortgage Bankers Association of America report on Thursday showed that Ohio has the highest percentage of homeowners either in foreclosure or with payments that are 90 days or more behind.

A separate report done by national mortgage lender Freddie Mac shows that Cleveland is the only U.S. metropolitan area where late mortgage payments and foreclosures have increased in the last year.

"It's doesn't surprise me that we're worse than other metropolitan areas, but it does surprise me that rates here are actually rising," said Richard DeKaser, chief economist at National City Corp. in Cleveland.

The U.S. Census Bureau in September said Cleveland was the poorest big city in the nation, so it makes sense that the city also has high mortgage delinquency and foreclosures, said Carrie Bender, director of research and investigation for the nonprofit Housing Research & Advocacy Center in Cleveland.

But Bender said she was surprised that the trend also is affecting suburbs.

"This might be the result of overborrowing," she said.

Bender also said high-cost mortgages known as predatory loans may also be a factor.

According to the Mortgage Bankers report, 1 of every 21 Ohio homeowners fell into that 90-days-plus category as of June. One of every 11 in Ohio is 30 days or more behind on mortgage payments.

Ohio's combined foreclosure/delinquency rate is 65 percent higher than the U.S. average.

The Freddie Mac report shows the Cleveland area's foreclosures and 90-day-plus delinquencies increased by a combined 4.65 percent since the end of last year.

Every other large metro area nationwide saw foreclosures and serious delinquencies either decrease or stay the same, said Freddie Mac spokesman Brad German.

Even compared to other cities in the economically struggling Midwest, Cleveland's showing was poor. The foreclosure/delinquency rate dropped by 5.58 percent in Columbus, by 15.51 percent in Cincinnati, by 15.75 in Detroit and by 12.34 percent in Chicago.

Freddie Mac's study coincides with its efforts to urge homeowners to be proactive in managing financial distress. Consumers who face their problems and are upfront with their lenders are more likely to save their homes, German said.

Freddie Mac said job losses was the most likely explanation for its poor showing. Ohio has lost more jobs than any other state - 237,000 since early 2001.

Doug Duncan, chief economist for the Mortgage Bankers Association, said foreclosure and delinquency rates are a lagging indicator because people who lose their jobs or hit a financial crisis don't go into delinquency or foreclosure until some months afterward.

Duncan said it's disturbing that Ohio's rate has continued to rise while the national rate has fallen. Ohio topped the list of states with the most foreclosures and delinquencies for the first time in the second quarter and it's expected to stay there for a while, he said.

"What has happened is this is the second wave of manufacturing job loss," said Duncan.

"The unfortunate thing is those jobs are not likely to come back," he said.

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