Michigan Foreclosures Bucked National Trend, Surged Over 8%

by Donald Hanz on States

Michigan foreclosures bucked the national trend of declining foreclosure activity in April, as they marked a jump of 8.3 percent from March and a stark contrast to the nationwide decline of 9.05 percent.

Michigan filings also marked a stunning 77-percent spike from April last year, although researchers explained that a change in the counting of default notices in the state in August last year contributed to the sharp increase rate.

The unemployment problem in Michigan is still a major foreclosure factor, as Michigan again posted the highest state unemployment rate for the month of March, which was 14.1 percent. The rate remained unchanged from February, but it was far above the national rate of 9.7 percent. Michigan has been experiencing the highest jobless rate among states over the past few years, based on data from the state labor department.

Job losses were highest in the manufacturing sector, which cut 28,000 jobs over the past year. There were also substantial job losses in trade, utilities, transportation and construction. Unemployment did not only push up the number of residential properties in foreclosure; it also drove commercial properties back into the books of banks, as consumers tightened their spending.

As a result, businesses failed to pay their rentals on time; or worse, did not renew their leases and just closed their operations. Banks also made the business environment more difficult when they refused to refinance or make additional loans.

Economists at the University of Michigan said that they expect more job losses this year and that employment recovery will probably start next year. They also pointed out the role of the national economy and the operations of the top three automakers in the recovery of Michigan.

Michigan foreclosures increased to a total of 19,173 filings in April, reflecting one filing for every 237 homes in the state and marking the third highest total for a state during the month. Based on foreclosure rate, however, Michigan ranked seventh.

Of the more than 19,000 homes hit with filings statewide, a total of 6,252 units were already in listings of foreclosed properties for sale, accounting for 32.6 percent or almost one-third of total statewide filings.

Total REO homes in Michigan in April accounted for 6.8 percent of total REO homes nationwide and total filings in Michigan accounted for 5.7 percent of total filings nationwide. Michigan and the four other top foreclosure states comprised 52 percent of the nationwide total of filings.

Among the 5 states which were given a total of $1.5 billion recently to address their unemployment and foreclosure problems, it was only Michigan which still posted a year-over-year increase in April.

All the three other states, California, Florida and Arizona, posted substantial declines in filings both from the previous month and from filings one year earlier. Nevada posted a month-over-month surge, but posted a year-over-year decrease.

Community advocates and officials hope that the $154 million the state of Michigan received as a share from the $1.5 billion allocation would help slow down the pace of Michigan foreclosures in the coming months.

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