Fixing The Foreclosure Crisis

Although residential mortgage foreclosures have wreaked havoc on many communities in metro Detroit and Michigan, efforts to stem the damage and boost property values are under way. But do the relief programs go far enough?


Published:

(page 1 of 7)

 The first decade of the new millennium will go down as one of the most turbulent in the history of the housing market, both in Michigan and across the nation.

The subprime mortgage crisis, lax federal oversight, and a spike in energy prices, coupled with high unemployment — the “perfect storm” of the 2008 financial meltdown — created an epidemic of foreclosures that have devastated families, neighborhoods, businesses, and property values, and have sharply reduced the tax revenue needed to support public services and schools.

Although a turnaround won’t be immediate, there are many organizations — assisted by state and federal efforts — working to reverse the trend and put communities across the region and throughout Michigan back on solid footing.

From 2006 through 2010, Michigan racked up nearly 275,000 so-called REO (Real Estate Owned) residential properties — dwellings that revert back to a lender, government agency, or government loan insurer following an unsuccessful sale at a foreclosure auction. Of that amount, nearly 162,000 of the properties were in Wayne, Oakland, and Macomb counties. Michigan ranks seventh nationally for REOs, according to RealtyTrac.

Meanwhile, default notices and foreclosure actions were filed on tens of thousands of other properties. Because so many homes were abandoned, sold for far below market value, or were converted into rental properties, home values have dropped 32 percent in the region during the past five years, according to the Southeast Michigan Council of Governments (SEMCOG).

In addition, thousands of borrowers who purchased homes at the height of the housing bubble, or refinanced their mortgage to buy a boat or a cottage up north, are “underwater” and at a higher risk of foreclosure, given that their loan balances are greater than current market values. In June, SEMCOG reported that 36 percent of mortgage borrowers in Michigan are underwater, the fourth highest rate in the nation.

No ZIP code has been immune.

Edit Module
Edit Module Edit Module
Edit ModuleShow Tags

Related Articles

30 in Their Thirties 2018

The 2018 class of 30 in Their Thirties spans the business world, including employee staffing, finance, food production, health care, insurance, real estate development, and technology.

Roll 'Em

The film industry in metro Detroit, which is very much alive despite the end of sizeable state incentives that were designed to attract top-flight actors and directors, can draw big-budget production companies like Disney and Warner Bros. by building up a creative infrastructure.

Q&A: Chris Thomas

Chris Thomas is a co-founder of Fontinalis Partners, a venture capital firm in downtown Detroit focused exclusively on investing in technology companies that improve next-generation mobility.

Line of Flight

A longer runway at Cherry Capital Airport in Traverse City, new golf courses and wineries, upgraded resorts, and revamped marketing campaigns are attracting more tourism in northern Michigan.

Integrating Circuits

Not since Detroit absorbed California hot-rod culture have the Motor City and the Golden State embraced each other so tight. The quest to perfect self-driving cars and find innovative mobility solutions made it happen. Is this the biggest story in American business?
Edit ModuleShow Tags

Most Popular

  1. GM, Leading Charge Providers to Create America’s Largest EV Charging Network
    The lack of a robust charging infrastructure is one of the major hurdles hampering widespread...
  2. Dearborn’s Ford Motor Co. to Host Winter Festival at Michigan Central Station
    Ford Motor Co. in Dearborn will host a 10-day Winter Festival in front of its recently purchased...
  3. Downtown Detroit Partnership Names President, Chief Marketing Officer
    Downtown Detroit Partnership today announced John Walsh as president, effective immediately. Eric...
  4. San Francisco Investment Firm Acquires Warren’s Lipari Foods
    San Francisco investment firm H.I.G. Capital has acquired Warren’s Lipari Foods from...
  5. Warner Norcross Names Four New Partners in Southfield and Macomb County Offices
    Warner Norcross and Judd today announced it has named two partners to its Southfield office and...
  6. Intrepid Control Systems in Madison Heights Introduces All-in-one Data Logger for Autonomous Vehicles
    Intrepid Control Systems Inc. in Madison Heights Friday introduced its Autonomous ONE...