Archive for the 'Michigan Repo Homes' Category

Andy Meisner, newly appointed treasurer of Oakland County, Michigan has proposed to set up a county land bank to buy, renovate and sell repossession homes. But his proposal was met with skepticism by the Oakland County executive.

Meisner proposes that the county purchase and manage mortgage-foreclosed and tax-foreclosed homes to maintain them and placed them on responsible hands so that they would not become blights to neighborhoods and pull down housing values.

He describes a land bank as incubator of vacant repossession homes that can be used by local governments, community stakeholders and the private sector to avoid any damage that the foreclosure crisis can bring on home values and community stability.

He said that the land bank can work on the 61 communities in the area, including Pontiac and Bloomfield Hills.

County executive L. Brooks Patterson confirmed that Meisner submitted his land bank proposal to county officials. He said that Meisner’s proposal would be heard by members of the Board of Commissioners who will file a resolution if they approve the proposal.

However, Patterson pointed out that Meisner’s land bank plan lacks financial estimates and specifics. He said that the main issue would be the cost considering that the county is in a cutting mode and there is no money available for nonessential programs.

According to Meisner, he was not able to provide a cost estimate because the program to buy, fix and sell repossession homes is still on the study table. In 2008, the county received about $17.4 million under the neighborhood stabilization program to purchase or fix blighted or foreclosed properties.

Meisner clarifies that he is not proposing to buy all foreclosure properties, but instead buy, fix and sell as many as the county can. He said that land banks eliminate the tax burden during renovation and allow the immediate clearing of the property’s title. Data showed that foreclosure rates in Oakland County reached a total of 14,000 in 2008.

Meanwhile, Oakland County Sheriff’s Office data showed that foreclosure houses in the area reached 9,625 last year and 4,419 this year.

Majority of repossession homes in Oakland are mortgage foreclosed, which means homeowners failed to pay their monthly mortgages and banks take over ownership of properties.

Average home prices in the Metro Detroit counties of Macomb and Oakland have fallen by 12 to 22 percent due to the continued unloading of foreclosed properties into the housing market and the soaring Michigan foreclosure rate. Median home prices in Macomb dropped by an average of 14 percent and Hazel Park and Lathrup Village posted the biggest declines with 22 percent.

Oakland County, recognized as the most economically advanced part of the region, suffered large rates of decline in home prices, with Birmingham and Bloomfield Hills both posting nearly 15 percent and the area of West Bloomfield posting 12.15 percent.

Among Detroit areas, the most adverse effect of bargain home prices happened in Hazel Park, which was home to 18,000 people. With two units in every 25 homes put into foreclosure, home prices decreased to a point that bankers approved subprime mortgages to be able to sell the repo homes.

With subprime rates of more than 40 percent applied on the home loans, subprime borrowers eventually defaulted, continuing the cycle of cheap home prices and foreclosure.

Ed Klobucher, city manager of Hazel Park, said that the high number of affordable homes in his community attracted predatory lending companies to target his area.

According to a survey by the National Association of Realtors (NAR) in the first quarter of this year, nationwide, single-family home prices dropped 7.7 percent in the first quarter, the largest annual decline since 1982 when NAR started compiling home prices. During the third quarter, the national average single-family home price dropped by nine percent to $200,500 from the same quarter in 2007.

Although Michigan foreclosures slowed down a bit in September by 12 percent to 265,968 in August, home prices continued to fall due to the rising number of unsold houses. In the quarter ended September, statewide foreclosure filings increased by only two percent compared to the same quarter in 2007. Metro Detroit’s foreclosure filings decreased by 24 percent compared to the same quarter in 2007.