Montgomery County foreclosure rates on rise

By Francis X. Gilpin

For those struggling to scrape together a down payment, it seems like the answer to buying a home: an adjustable-rate mortgage with an unbelievably low introductory interest rate and no money down.

Two years into the loan, however, the interest rate jumps. A much higher interest rate means a much higher house payment, which many families find they can't make.

And the American dream falls into foreclosure. It's a nightmare happening across the country and right here in Montgomery County, even in better neighborhoods.

The number of loans in the county written for more than $100,000 on homes that have gone into foreclosure almost doubled in the first three months of 2007, compared with the same quarter last year.

While the number of foreclosures countywide dipped slightly during the first quarter, a Montgomery Advertiser analysis of property records shows $100,000-plus mortgage foreclosures increased from 18 in 2006 to 32 for the January-to- March period this year.

Alabama Deputy Banking Superintendent Trabo Reed isn't surprised.

"This isn't atypical, from what we've been hearing," Reed said.

Alabama isn't unique, according to Scott W. Corscadden, who licenses mortgage brokers at the state Department of Banking.

"I'm a homeowner and I'm concerned," said Corscadden, who has attended conferences lately on the troubled mortgage industry. "I'm a regulator and I'm even more concerned."

Realtor J.C. Schulte is concerned, too.

Schulte listed a house for sale in east Montgomery's Young Pointe subdivision last month. A couple of doors away are two homes -- side by side -- that were recently sold to lenders by auctioneer or foreclosure deed.

James and Krista Coons, Schulte's clients, hope their former neighbors' failure to make the payments on $100,000-plus mortgages won't keep them from getting a fair price.

More and more homeowners with specific types of adjustable-rate mortgages are facing foreclosure. The mortgages devolve into essentially a 2-year balloon loan.

From 2002 to 2006, lenders heavily promoted sub-prime loans to borrowers with poor credit scores. Many of the loans required little or no money down. After a low introductory "teaser" rate of below 4 percent, the interest rate adjusts to a double-digit percentage. The monthly payments become unaffordable and foreclosure isn't far behind.

Many homebuyers qualified for their mortgages on a debt- to-income formula only for the teaser period, yet lenders wrote the mortgages anyway, Corscadden said.

The spike in foreclosures brought sub-prime loans to the attention of federal lawmakers. A Senate banking subcommittee called a hearing last fall.

"Sub-prime lending is not a small problem that affects only a few homeowners," Michael D. Calhoun, who heads the Center for Responsible Lending, told the senators. "One in every four home loans originated in 2005 was a sub-prime loan."

In 2005, Montgomery had the 16th highest sub-prime refinancing activity of more than 300 U.S. metropolitan areas studied by the Consumer Federation of America. Almost 22 percent of Montgomery area homeowners refinancing their mortgages were given a new interest rate 5 percentage points or higher than the U.S. Treasury rate.

By comparison, Decatur and Dothan each had about 25 percent of homeowners refinance. Mobile, Birmingham and Tuscaloosa each had approximately 20 percent.

Cinque J. Cullar purchased one of the houses on the circle where the Coons family lives. Although county records don't indicate his $158,000 loan came with an adjustable interest rate, a Decatur mortgage company apparently financed Cullar's entire March 2006 purchase.

The mortgage was sold in November to Wells Fargo Bank, which foreclosed and bought the property at auction for $167,402, the loan balance. For tax purposes, the county values the 1,794-square foot, two-story house at $169,600. Cullar, who couldn't be located for comment, held title for less than a year.

Real estate agent Schulte has noticed more and more higher- end Montgomery homes going into foreclosure.

"It's the result of what's going on with these sub-prime loans," Schulte said.

Corscadden, the banking official, and other regulators think the full impact of the loose lending practices hasn't been felt yet.

" '08 is the really worrying year," Corscadden said.
Source: http://www.montgomeryadvertiser.com

Dale County housing sales thriving

Wednesday, Mar 28, 2007 - 10:38 AM
By Ebony Horton
Although statistics show a decrease in new residential sales in Alabama and across the country, an increase in industry in Dale County may be why some local real estate agents say they have not been affected.

Mikie Walding, owner of Mikie Walding Management in Ozark, said the company has seen almost double the results in building and rental properties in Dale County than it has in the past three years. His company constructs about 23 to 30 new homes annually around the Ozark and Ariton area, he said.

Housing sales across Alabama over those three years have always dropped in January, according to the Alabama Real Estate Research and Education Center.

New one-family residential sales decreased from January to February in the South by 7 percent, according to the U.S. Department of Housing and Development, while new housing sales across the country decreased in February by 3.9 percent.

But while housing statistics have wavered, developments in the aerospace industry in Dale County such as Bell Helicopter, along with cheaper property taxes statewide, may contribute to future stabilization.

“Housing sales have not slowed down one bit in Dale County for us. I know Fort Rucker’s (employees) helped it a little bit and interest rates can have an impact, but whatever it is we’re building and renting about the same every month,” Walding said.

Kathleen Waters of Century 21 Gateway Realty in Ozark said that company had also not seen a decrease in housing sales.
http://www.dothaneagle.com

Real estate course popular

Friday, Jan 26, 2007 - 12:01 AM Updated: 02:11 PM
By Jim Cook
E-mail

Dwight Wells starts off class by deftly handling a student's request that he reschedule a meeting set for Valentine's Day.

"Just get you some sugar early or later," he says.

Personality. It's the one attribute of a successful real estate seller which Wells has that he can't teach the students in his pre-license real estate course at Troy University's Dothan campus.

The class is part of the university's continuing education program, a non-academic class meant for career or personal development. In the class, students learn about real and personal property, financing, real estate law, contract writing and environmental issues. It's one of the continuing education program's most popular offerings, drawing students who want to make a career change, pick up a lucrative weekend job or learn more about managing their home investment.

"I get nurses, lawyers ... I've had a multi-millionaire," Wells said.

Wells said Dothan is a good market for real estate sales. Home values have steadily increased for the past few years, and don't appear to be subject to wild fluctuations in value common to other markets. The average sale price of a home in Dothan for November 2006 was $165,903. In November 2000, the average sale price was $118,219.

Wells attributes the steady growth to Dothan's diverse economy and southeast Alabama's emergence as a haven for retirees who want to move south, but don't want to pay for expensive Florida real estate.

Heather Cox is a legal assistant taking the course. She said what she's learned about deeds and titles has already helped her in her current work.

"All of the states have different types of laws," she said. "Some of the things that are illegal in Alabama are different in other states."

Wells, a local real estate broker who has been teaching pre-license classes for 30 years, said completing his class entitles students to sit for the state real estate licensing exam. A little more than half of all people who take the exam pass it. After passing the exam, students must take another post-license class.

Even those who pass the test may not be able to cut it in the real estate market. Wells said there's a high turnover rate among full-time real estate sellers. It's a demanding profession, requiring the wisdom of Solomon, the patience of Job and the enthusiasm of a high school cheerleader.

"A lot of people can't do it," he said. "It's not that they're bad, but it just doesn't suit their personality."

For more information on this and other Troy University continuing education courses, please call (334) 983-0005.
http://www.dothaneagle.com

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