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?
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Not everyone sees a judicial foreclosure system as a panacea. “Certainly with judicial foreclosure it would take longer, require more legal work, and would need more judicial resources to handle the caseload,” Weisserman says. “It could cost the borrower and lender more money, and I would not be surprised if you saw an increase in interest rates on loans, or that loans may be more difficult to come by as a result. The amount necessary to reinstate a loan could also increase accordingly.”
Although the foreclosure crisis and depressed home values remain a serious problem, the latest evidence points to some stabilization. According to Daren Blomquist, a spokesman at RealtyTrac, a turning point may be occurring.
“Michigan, and especially the Detroit area, was hit earlier than the rest of the country by unemployment, so the hope is that it will be the first to get out of the mess,” he says. “Foreclosures (in 2011) are on a pace to be less than in 2010, and the market is close to reaching the bottom, if it hasn’t already. However, we have to be cautious about a possible second wave, because some banks have slowed down foreclosures” due to greater government scrutiny.
Dan Elsea, president of brokerage services at Real Estate One, the largest real estate brokerage firm in Michigan, believes housing values have bottomed out across metro Detroit and are starting to rise, albeit slowly.
“What we are seeing is that a home that is in good shape and is well-priced has multiple offers and sells in days. If it’s not, it can take months,” Elsea says. “I think we will look back next spring and see that the appreciation in the metro Detroit area began in the spring of 2011.”
But most of all, an increase in the number of jobs available is the factor that is looked upon by planners, legislators, and real estate experts as the most important criterion in solving the foreclosure crisis and improving property values. “First and foremost, our housing is directly correlated to our job market,” says Morgan, of Home Renewal Systems.
“We used to say here that the No. 1 thing in real estate was ‘location, location, location,’ but now that has changed to ‘jobs, jobs, jobs.’ That is really the No. 1 issue that needs to be addressed.” db