Indiana is leading the way in many areas, and it is always good to see our state rising in the ranks. On one list, however, I am pleased to report our position is dropping. For most of the last decade, the home foreclosure rate in Indiana was first or second in the nation. As of the first quarter of this year, however, we had fallen to 10th place. An upcoming event should help continue the downward trend.
There are a lot of reasons for Indiana's high foreclosure rate. Between 2000 and 2002, Indiana lost more jobs than any other state in the country. In addition, many homes were purchased using down payment assistance and government-backed loans, which have a higher rate of default than conventional mortgages. Even when times were good, Indiana lagged in home price appreciation, and when the market turned, many homeowners found themselves with little or no equity and few options.
Enter the Indiana Foreclosure Prevention Network, a coalition of nonprofit organizations, government agencies, banks, professional associations and others that are actively addressing Indiana's foreclosure crisis. Since IFPN was launched in November 2007, approximately 70,000 Hoosier borrowers have received assistance.
Recent legislation also appears to be helping. Last year, the Indiana General Assembly passed two bills to address the foreclosure crisis.
House Enrolled Act 1176 dealt with abuses of the mortgage system that helped fuel the foreclosure crisis. It toughened penalties for improperly influencing - through bribery, collusion or coercion - a real estate appraiser to inflate the appraisal of a home. It also gave the state attorney general's office more authority to investigate real estate transactions.
Senate Enrolled Act 492 gave Hoosiers who are behind on their mortgage the opportunity to meet with their lender before the foreclosure process starts, and we're seeing many take advantage of this new protection.
As of the first quarter of this year, Indiana's rate of homes loans in foreclosure was 4.51 percent. The national average was 4.63 percent. By comparison, from 2000 to 2007, the national average was around 1 percent. During that same period, Indiana's foreclosure rate increased much faster than the national average. At the end of 2000, the national average was 0.85 percent, and Indiana's rate was 1.23 percent. By the end of 2006, the national rate had increased to 1.19 percent and Indiana was at 2.97 percent. For most of the decade Indiana ranked first or second in the nation.
IFPN is expecting more than 50,000 foreclosure filings in Indiana this year. Homeowners can seek help from IFPN by phone or on the Internet. The phone number is 1-877-GET-HOPE (1-877-438-4673), and the website is www.877gethope.org. Over the last year, IFPN has averaged more than 2,000 calls and 250 online help requests a month. Approximately 85 percent of the calls are a result of the pre-foreclosure notice required by last year's legislation. Most are referred to network agencies for counseling. The network includes the Housing Partnership, which has an office in New Albany.
In the majority (58 percent) of cases, loss of income is the reason an IFPN client is in trouble - once again underscoring the importance of job creation. The other major reasons are:
· Poor money management/excessive debt (14 percent)
· Medical bills (12 percent)
· Death/divorce (4 percent)
Foreclosure is devastating to families and expensive for everyone. Conservative estimates indicate that preventing a single foreclosure results in approximately $40,000 in savings to the homeowner, lender, mortgage insurance provider, local government and other stakeholders. In 2009, IFPN services resulted in a $28 million savings to stakeholders.
On Sept. 1, IFPN will hold eight borrower outreach events at Indiana National Guard Armories around the state. The events are free and open to the public. No registration is required. The closest location is Columbus. The armory there is at 2160 Arnold St. Information and confidential counseling will be available from 3 to 8 p.m.
To make the most of this event, attendees should take copies of the following:
· Monthly mortgage statement;
· Information about any other mortgages;
· Two most recent pay stubs, documentation of income received from other sources or most recent quarterly profit and loss statement if self-employed;
· Two most recent bank statements;
· Account balances and monthly payments for credit cards and other debts;
· Utility bill in homeowner's name showing current address; and
· Estimates of other monthly expenditures, including utilities, insurance and medical bills
If you know of a family member, friend, neighbor or co-worker who might be struggling with mortgage payments, please pass along this information.
As a Realtor, I have been involved with hundreds of foreclosures over the years. I have seen the harm caused to families, neighborhoods and communities. Every time I walk into a house that is vacant because of foreclosure, I am keenly aware of the heavy toll of foreclosure.
Help is available. When it comes to home foreclosure, let's keep working to move Indiana toward the bottom of the list.