Fewer people face losing home to foreclosure
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Foreclosure filings have fallen since the height of the recession, but the decline has stagnated in the past year, local figures show.
A foreclosure counselor said that thanks to a national settlement with large banks, struggling homeowners have more access to help in keeping their homes.
In the first six months of this year, the Bartholomew County Clerk’s Office logged 166 foreclosure filings, three more than in the same period last year.
Compared with the same period in 2010, foreclosures have fallen nearly 22 percent. Filings in Johnson County during that same span fell nearly 58 percent, while in Jackson County they fell about 13 percent.
Foreclosures are declining, but not as much as officials had hoped, said Ginger Scalf, senior foreclosure counselor at Eastside Community Center, 421 McClure Road.
Most of the foreclosures have been caused by people losing their jobs or losing income because of fewer work hours, she said.
When people lose a significant amount of their income, they struggle to balance monthly bills and a mortgage payment that was based on the previous higher income, Scalf said.
Lisa Piercefield, regional operations manager of Apprisen, which provides counseling on debt, credit, housing and bankruptcy, said foreclosures also frequently are caused by divorce and unexpected medical expenses.
Other homeowners were hit by ballooning payments on adjustable rate mortgages, Scalf said. Those mortgages give homeowners an artificially low interest rate in the first couple of years after the home purchase but can jump to 10 percent or more later.
“When it spikes that high,” Scalf said, “it becomes ... overwhelming.”
Experts generally recommend that a house payment remain near 30 percent of the gross household income. For the county’s median household income of about $53,000, that would mean a monthly house payment of no more than $1,325. If the household loses half its income, however, suddenly the percentage the homeowners spend on the mortgage jumps to 60 percent.
Scalf said she frequently sees those situations.
Scalf and Piercefield also said that homeowners today have more resources available to them to avoid foreclosure, thanks in part to a settlement that 49 attorneys general, including Indiana’s, reached with five big banks this year.
The $25 billion settlement ended a painful chapter of the financial crisis, when home values sank and millions edged toward foreclosure. Many companies processed foreclosures without verifying documents. Some employees signed papers they hadn’t read or used fake signatures to speed foreclosures, an action known as robo-signing.
The deal requires the banks to reduce loans for about 1 million households that are at risk of foreclosure. The lenders also will send $2,000 each to about 750,000 Americans who were improperly foreclosed upon from 2008 through 2011. The banks will have three years to fulfill terms of the deal.
Scalf and Piercefield said Eastside and Apprisen work with lenders to help homeowners become current on their payments and stay that way.
Scalf said counselors typically can reduce the borrower’s interest rate and lower their mortgage payments — at no cost to the homeowner.
“We save more and more homes every year,” Scalf said.
Piercefield said that Apprisen counselors also work with the homeowners to make sure that they budget properly to be able to afford the new house payment for the long term.
Scalf said that a home purchase usually is the single-most important financial decision that people make in their lifetimes, and she encouraged current and potential homeowners to seek advice from Eastside or other agencies on how to find the right lender, how to examine their budget and how much of a home they can afford.
The Associated Press contributed to this report.
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