More Bank Foreclosed Homes Expected as Values Drop Further

by Peter Vernon on Foreclosure Rates

An estimated 44 percent of all homeowners in the metro Toledo area in Ohio saw the values of their properties dropped less than their outstanding mortgages. As of June 2009, there were 61,155 houses with negative equity in the counties of Lucas, Ottawa, Fulton and Wood. The combined total value of properties with negative equity amounted to $7.2 billion.

According to industry analysts, the growing number of properties with negative equity is a predictor of the coming wave of bank foreclosed homes in the area. They said that many homeowners who have negative equity on their properties prefer to walk away from their houses and allow lenders to foreclose them.

Additionally, market data showed that 8,120 properties in the region were nearing the negative equity position. This means that these properties were within 5 percent of seeing their values to less than the mortgage owed by their homeowners. Analysts pointed out that nearly 50 percent of homeowners in the region are either close to having greater debt that their houses are worth or owe more than the value of their properties.

But Lucas County Foreclosure Task Force co-chairman Wade Kapszukiewicz does not believe that just because the property is underwater it is more at risk of foreclosure. He said that being underwater meant that people do not have the same net worth that they have five years ago, adding that they need to work more for less money.

Industry experts said that current market data showed that the housing situation in the metro Toledo area is getting worse. They pointed out that 2008 ended with 30,140 properties or 28 percent of all houses in metro Toledo area with mortgages were in a negative equity position.

The rate of properties with negative equity nationwide was 32 percent or 15.2 million. Statewide, 39 percent or 861,528 properties have negative equity.

Some industry experts viewed the figures with skepticism saying that most housing values do not represent the market.

Meanwhile, the foreclosure crisis in Ohio was fueled by massive layoffs in the manufacturing and automobile industry. A few months back, statewide foreclosure activity flatten due to the increase in the number of bankruptcy filings, which stop the foreclosure process.

But industry analysts are expecting foreclosure activity to pick up soon as more and more homeowners would choose not to spend more mortgage payments on properties that have negative equity.