Reported by Courier-Journal.com - January 14, 2011
By Chris Otts - cotts@courier-journal.com
Janeen Jones remembers the “amazing feeling” of becoming a homeowner for the first time at age 37.
She bought a 1.5-story, four-bedroom home with a large covered porch on West Broadway, next door to her elderly aunt.
But after losing her job and falling more than a year behind on the mortgage, Jones is considering handing the 90-year-old house back to the bank, which has filed a foreclosure against her, and finding a place to rent.
“Sometimes you’ve got to just walk away,” she said.
Foreclosures increased about 20 percent in Jefferson County and throughout the metro area in 2010, according to two separate measures. Still, the local foreclosure rate remains below the national average, and there are some early signs that the crisis might finally let up this year.
Jefferson County scheduled 5,229 court-ordered foreclosure sales last year, a 19 percent increase from 2009, according to Edith Halbleib, the county official in charge of foreclosures. Nearly 2,600 properties were actually sold at auction, a 24 percent increase from 2009.
The figures include commercial and industrial property, but the “great majority” of foreclosures are residential, said Halbleib, master commissioner of Jefferson Circuit Court.
Meanwhile 7,540 residences in the 13-county Louisville-Southern Indiana area were in some stage of foreclosure during the year, a 20 percent increase from 2009, according to data released Thursday by RealtyTrac.com, a website that helps buyers find foreclosed properties.
Louisville’s foreclosure rate was one in every 73 residences, better than the rate of one in every 45 for the nation as a whole, according to RealtyTrac. Among 203 metro areas, Louisville had the 82nd lowest foreclosure rate.
More than half of all foreclosure activity last year was concentrated in five states: Arizona, California, Florida, Illinois and Michigan, RealtyTrac said.
Jones’ foreclosure, filed by HSBC Mortgage Services in November, has not been scheduled for a sale yet, but that could come up for a court-ordered sale in a matter of months, as Jones says she doesn’t have the $8,407 the bank is asking to put the loan back on track.
Once a foreclosure notice is received, a process that could take at least six to eight months gets started, said attorney Stuart Pope, advocacy director at the Louisville Legal Aid Society.
Before a homeowner can be forced out of the house, the lender must show it owns the loan and that the homeowner has defaulted on payments before a judge orders a sale through the commissioner’s office. All the while, the homeowner can negotiate a payment plan with the bank and potentially save the house, or buy time by fighting the proceedings in court.
The pace of foreclosures in Jefferson County has been rising for at least five years, and the court now handles nearly six times the number of cases it did in 2000, the earliest year for which statistics were readily available.
There are, however, some signs that foreclosures might finally slow down this year, Halbleib said.
While the court handled about 200 cases during each bi-monthly sale last year, the docket is looking much lighter lately, with 179 scheduled for Jan. 18, 108 for Feb. 1 and 83 for Feb. 15.
RealtyTrac said there was a big slow down in foreclosures nationally at the end of the year as shoddy documentation practices were revealed at big banks. Last week, the highest court in Massachusetts ruled for homeowners in a closely watched case involving wrongful foreclosures by U.S. Bancorp and Wells Fargo & Co.
But in Jefferson County, “I really can’t say that I have seen many of those cases,” Halbleib said, adding that the slowdown could be related to more run of the mill factors like homeowners working out deals with banks or filing bankruptcies to stop foreclosure sales.
If the slowdown continues, she said, “I think we will see at least a small decline for 2011. …The trend is certainly not up.”
Jones’ foreclosure, filed by HSBC Mortgage Services in November, could come up for a court-ordered sale in a matter of months, as Jones says she doesn’t have the $8,407 the bank is asking to put the loan back on track.
Rather than selling her house at auction, HSBC has offered Jones $2,500 in “relocation assistance” if she moves out, leaves the property in good condition and either sells the house at a steep discount with HSBC’s approval or hands over the title.
Jones, 42, bought the 1,454-square-foot house in 2006 for $69,900 with nothing down and a fixed interest rate of 9.99 percent, according to court and property records. The loan came through Decision One Mortgage, a unit of HSBC that made loans to those with weaker credit. HSBC shut down Decision One in 2007.
Jones said she first fell behind when she lost her job as a customer service representative in 2008. She found a job about two months later as a caretaker for disabled people, but her salary went from about $15 an hour to $11, she said.
Her husband was also jobless for about a year and now works part-time, she said.
For about six months, HSBC lowered Jones’ payment from $612 a month to about $400, but in July the bank asked for $8,407 — the amount it says it advanced for Jones in insurance, property taxes and the bank’s cost of making sure the property is maintained — to keep the loan in good standing.
HSBC spokesman Neil Brazil declined to comment on Jones’ case, but he sent a statement saying the bank considers foreclosure a “last resort” and helps homeowners in exchange for an orderly turnover of the property.
Other homeowners find it more difficult to communicate with their banks, housing counselors say.
Azari Cardoso and Yusimy Rossi, for example, have been trying for months to get a loan modification from US Bank after falling behind at least $6,629, when fees are included, on their house off Indian Trail in the Newburg area.
Cardoso and Rossi are Cuban immigrants who said they were laid off as welders at the Jeffboat shipyard in Jeffersonville, Ind., in 2009. Rossi was called back last year, giving the couple enough income to make them good candidates for a payment plan that would keep them in the house and work off the debt over a longer term, said Dan Farris at the Housing Partnership, their counselor.
But several phone calls and faxes of their documentation, a deal has yet to come through.
“It’s certainly is part of the frustrating process that a lot of homeowners experience,” Farris said.
Their house, which they bought for $126,514 in 2008 but was appraised at $115,000 last year, was on the foreclosure docket in August and October but withdrawn by the bank each time as it continued to consider the couple’s paperwork.
Lisa Clark, a Madison, Wis.-based spokeswoman for US Bank, said the bank wants to avoid foreclosure as much as Cardoso and Rossi do.
“We are, as we speak, working on the loan modification papers for them,” she said Wednesday.
This month Cardoso and Rossi resumed making payments of $947 a month so as not to fall more than a year behind, which would make them ineligible for a federal program that gives lenders an incentive to avoid foreclosure.
But it’s risky to keep paying the mortgage once a foreclosure is started, Farris said, in case the house is sold anyway. Usually lenders stop accepting payments after the process begins.
Clark said the payments are necessary for the couple to show the bank that a modification would work. “You have to demonstrate some income and consistency to pay something on the mortgage,” she said.
Cardoso, who speaks broken English, said for now he’s just glad the house — where they live with their three children — is no longer on the foreclosure docket.
“I am sleeping better,” he said.
Reporter Chris Otts can be reached at (502) 582-4589.
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