FORECLOSURE: On the edge
Unemployment, rising cost of living boost number of those losing homes
Shoppers who are watching their wallets have led stores to cut back their orders and factories to trim production, a scenario that puts truck driver Charles Hayes in danger of losing his Goose Creek home.
Melissa Haneline
The Post and Courier
Steve Young and Kevin Stubbs (right) look over a list of foreclosures during a foreclosure auction at the Charleston County Judicial Center on October 21.
With fewer deliveries to make, the small company he works for switched to a four-day work week to keep all 16 drivers on the payroll.
"The bottom man — he's got a family to feed, too," Hayes said of fellow drivers with less seniority.
Hayes was able to adjust to the slowdown at first. But by late summer, the numbers in his household budget weren't adding up, especially after his monthly mortgage payments readjusted to higher interest rates.
Now, his lender has filed a foreclosure lawsuit.
The crumbling U.S. economy has left homeowners like Hayes in a financial bind. County records show that hundreds of Charleston-area property owners are falling behind on their mortgage payments. A record number of foreclosure lawsuits were filed during the third quarter.
Financial experts originally pinned much of the blame on exotic mortgages provided to borrowers who could not afford them. But higher unemployment coupled with rising household expenses are now thought to be bigger factors in the rising foreclosure rates.
Interactive look at foreclosures
Home foreclosures continue to rise (Flash graphic)
Debbie Kidd of the nonprofit Family Services Inc. in North Charleston, which offers free foreclosure counseling, said the growing volume of delinquent mortgages is no longer just a problem within the real estate industry. It is now a symptom of broader mounting financial hardships, she said.
Many families Kidd sees are one major unplanned expense or other economic disruption away from losing their homes. It could be a broken-down car, a medical emergency or the loss of a second job.
"It takes very little to push a family over the edge these days because they're living paycheck to paycheck," she said.
Somber stats
A total of 982 foreclosure lawsuits were filed against property owners in Charleston, Berkeley and Dorchester counties during the third quarter, according to an analysis of court records by The Post and Courier. That's a 12.7 percent increase compared with the previous three months.
Previous stories
Foreclosure crisis; Ongoing problem affecting all neighborhoods, published 02/17/08
S.C. slow to help in home crunch; Nonprofits seek cash to help stave off foreclosures, published 04/29/08
Foreclosure fever; More Charleston-area property owners face losing homes to mortgage lenders, published 07/20/08
Berkeley County recorded a 25 percent jump from the previous quarter, while Charleston County's increase was a more modest 3.5 percent. Year to date for those two counties, for every two foreclosures filed in 2007, three have been filed this year.
Dorchester County, which tracks its foreclosure rate by counting the number of distressed properties either sold or scheduled to be sold during a given quarter, had a 47 percent increase from the previous three-month period and a 156 percent increase from the same quarter last year.
Several national statistics have pegged South Carolina as somewhat shielded from the foreclosure trend, but those statewide figures include rural areas where, in some instances, foreclosures have dropped.
Investor speculation and loose lending standards led to rapid sales and prices growth in the Charleston area in only a few years. As the market and prices have cooled, some homeowners who bought or refinanced their homes during the peak owe more than their property is worth.
Hayes, for example, lives in the 220-home Oak Creek subdivision, where older homes for sale face stiff competition from newly built residences available in the same price range a few miles away.
Ten foreclosure lawsuits have been filed against homes in Oak Creek so far this year. In some instances, lenders who financed homes in the Goose Creek neighborhood have agreed to accept less than they are owed through what's known as a "short" sale.
Week to week
As foreclosure rates began rising earlier this year, economists pointed to adjustable loans that began to change from fixed low-interest rates to higher floating rates, pushing payments beyond what some borrowers could afford.
For help
Family Services Inc. of North Charleston, a U.S. Department of Housing and Urban Development-approved nonprofit group, offers free foreclosure counseling. The number is 888-320-0350.
But the economy has weakened in recent months in South Carolina along with the rest of the country. Last week the state Employment Security Commission announced that September's unemployment rate hit 7.3 percent, slightly down from a 15-year high reached the month before.
The U.S. dollar also has gained value, which is bad for South Carolina factories that had been humming with export orders from overseas buyers taking advantage of the cheap greenback.
Foreclosure counselors at Family Services are hearing more stories from financially troubled homeowners who have lost second jobs or no longer are needed to work overtime.
"It's not even that their (loan) rates are adjusting. We're just seeing people who are struggling to get by week to week," Kidd said. "They fall one payment behind, and then two, and then they begin to snowball after that."
Rising expenses on everything from gas to food to electricity also have chipped away at the family budget. Overextended households were recently the topic of a study from Center for Housing Policy, a Washington, D.C.-based research group. The report said that while burdensome loan payments have grabbed headlines, the cost of food, insurance, health care and utilities have, in some cases, increased at a faster rate. Mortgage payments account for only part of the problem, author Barbara Lipman said.
"These are the things putting pressure on household budgets that are exacerbating the foreclosure problem," she said.
Kidd said overextended budgets are helping to fuel a sudden increase of home foreclosures in the East Cooper suburbs. Court records show a dense clustering of foreclosures in some of the newer neighborhoods north of S.C. Highway 41 in Mount Pleasant. On Daniel Island, more than half of the 14 foreclosures filed this year have occurred in the last three months.
At Family Services, families who seek foreclosure counseling are told to trim their expenses, whether it's hair appointments or cable TV.
But those cutbacks, in some ways, are hurting people like Hayes, who has fewer deliveries to make to big box retailers. Another one of his stops, the Gates Corp. automotive parts factory in Moncks Corner, is closing soon, likely leaving more than 200 workers without jobs. And Hayes hasn't been called in weeks for a side job driving containers to Savannah on weekends.
"It's never been this slow. I don't even understand," he said. "Usually, we're begging for some time off, but now they're practically laying us off."
Reach Katy Stech at 937-5549 or kstech@postandcourier.com.
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Comments
This article has 15 comment(s)
Posted by exorcist_pencocky4u on October 28, 2008 at 7:14 a.m. (Suggest removal)
Two years ago, before Democrats took over, things weren't this bad. Now with a possible Socialist take over Obama will drag us down the toilet.
Posted by mkris on October 28, 2008 at 8:23 a.m. (Suggest removal)
WOW.... when you think another wing-nut republican couldn't be any more stupid, you get the above post.
Thank-you for reminding me.
OH YEA... Phil Graham, McSame/ Caraboo Barbie's economic guru didn't sponsor the deregulation of the financial markets and the repeal of the Glass Stegal and Banking Act of 1933, huh Skippy?
Posted by Oceanlover on October 28, 2008 at 9:03 a.m. (Suggest removal)
Man, exorcist, you're really, really reaching. Particularly since the ORACLE himself, Greenspan - just said he had been caught completely blindsided by the financial crisis. But it didn't take an idiot, not even an idiot like Phil Graham to see that if you gave trillions in loans to people who couldn't pay them back, then maybe one day you'd have a problem. Wait, wasn't Phil - I mean McSame's top economic adviser - the one who paved the way for those stupid loans with a lifting of regulations w/Greenspan's blessing. Why yes, he approved the Glass Stegal and Banking Act of - a measure that, among other things, allowed companies to ratchet up their leverage to obscene amounts - thus paving the way for this housing debacle. You right wing nutjobs are blind to the noses in front of your faces. And I don't know why you're so concerned about socialism. Aren't we are already socialists in your book? I mean your wise and able hero W, has nationalized the biggest financial institutions and the biggest insurance company in America in the last month. Quit drinking the Faux News/Rush Limbaugh (two entities that have profited hugely by encouraging, not true conservative ideals but ignorance) kool aid and think for yourself.
Posted by coolfreaknbeans on October 28, 2008 at 10:12 a.m. (Suggest removal)
I would never get an adjustable rate mortgage loan. Certainly people who live paycheck to paycheck shouldnt do it. I would pay my mortgage no matter what. I would have no water,lights,phone,cable,whatever it took. It's much easier to get your lights back on or cable back vs being homeless. And the article says,"At Family Services, families who seek foreclosure counseling are told to trim their expenses, whether it's hair appointments or cable TV." Are you kidding me? You're about to lose your home- and going to the salon?? I'm sorry folks but this is more about personal responsibility and making good choices than blaming it all on a political party. We can't expect gov't to take the blame for peoples dumb decisions.
Posted by nappyd on October 28, 2008 at 12:01 p.m. (Suggest removal)
And you've noticed banks aren't exactly LENDING that money back out either.
Anyway, in some cases bankruptcy is an option for people to file for if they want to keep their home, but hey..this article didn't mention that.
Posted by mkris on October 28, 2008 at 12:55 p.m. (Suggest removal)
No its going to pay dividends for the shareholders.
Posted by whome on October 28, 2008 at 12:55 p.m. (Suggest removal)
"And you've noticed banks aren't exactly LENDING that money back out either."
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Why would banks lend out money right now? Interest rates are going to be headed for a huge correction as the US Treasuries become the last bubble to burst.
The funny thing is during the past 10 years, did anyone ask themselves why mortgage rates were so low? What fundamentals of the US economy justified such low rates? The Federal Reserve can only influence the short end of the yield curve, not the long end, and mortgage rates are generally based on the 10 year Treasury.
Right now, world currency's are imploding, partly because of the unwinding of trillions of dollars in yen carry trades that have been inflating asset prices for nearly 15 years. The only solution to the currency crisis will be for China and Japan to diversify out its dollar reserves and buy assets in the other imploding parts of the world (Australia, Canada, Eastern Europe, etc). Doing so will mean that the US borrowing costs will no longer subsidized by the Chinese. Look for 10 year yields to return to mid-1990s levels: ~7.00%. Throw in all the fees and costs, mortgage rates in 6-12 months will be approximately 10%.
Look on the bright side, the world bail out will not be done by the US taxpayer, but rather millions of Chinese laborers who have slaved making us iPods for $1 day...
Posted by whiskeyagogo on October 28, 2008 at 1:37 p.m. (Suggest removal)
The pictures tell the story. How many of us boomers grew up in houses like that? 2%? Or did you grow up in a 3BR, 2BA 1600 sq. ft brick ranch? Our parents knew better than to raise kids in mansions. Granite or Formica? We're dumb.
Posted by coolfreaknbeans on October 28, 2008 at 2:12 p.m. (Suggest removal)
I can't believe it spankerbuns....I agree with you. Republicans and democrats alike all pushed through that absurd bailout. Politicians on both sides failed us.
Posted by Larz13 on October 28, 2008 at 3:02 p.m. (Suggest removal)
If I remember correctly it was the Dems that had unamimous support for the bailout and only half of the GOP. Regardless, without a bailout both parties thought we would be in worse shape. We will find out in the years to come if it was worth it.
FREAK---ARMs are not all bad but they are not for everyone. People who get them should know what they are getting themselves into before they sign...my 2 cents.
Posted by coolfreaknbeans on October 28, 2008 at 3:23 p.m. (Suggest removal)
Agreed Larz13. My points were 1)That they are not for me and 2)I don't think people living paycheck to paycheck need one either.
Posted by IValueU on October 28, 2008 at 7:03 p.m. (Suggest removal)
The Problem: 125% Loan to Value, No Documentation Needed, Stated Income, Qualifying on the Low Teaser Rates, Pressure on Banks to lend in the Sub-Prime Market, Low Credit Scores, High Expense to Income Ratios, Maxed Out Credit Cards, Car Payments....
Not a Problem: Only requirement for a loan you could not afford was having a pulse.
Thank-you Jimmy Carter (1977 Community Reinvestment Act), Alan Greenspan, community activist groups (Acorn) and the greedy. All of us prospered whether it was the truck driver who had a full delivery schedule, the retirement couple who benefited from dividends, the un-qualified applicant who lived in a home they could not afford or the personnel in offices and factories everywhere because they including you had a job.
Posted by CannonMan on October 28, 2008 at 11:08 p.m. (Suggest removal)
exorcist_pencocky4u - Maybe you should understand what socialism is before you start throwing the term around... please educate all of us why Obama is a "possible socialist" and that "he will drag us down the toilet".
After all, the US has had such GREAT RUN under Bush and the Republicans <insert sarcasm>. Let's do a quick tour shall we - one terrorist attack on American soil when the warning was in spades in the preceding months and years, two unpopular wars with questionable return on investment, three-bagger oil and gas prices, and one major economic disaster catalyzed by US policy (or lack there of).
I believe in the ability of a system to re-balance itself. But every system needs some kind of regulation to facilitate the desired result. For example, you make chemicals with plant equipment - otherwise, the reactions would just run unchecked.
So, if by socialism you are against any sort of regulation at all, then go to Yahoo Finance and pull up a 5-year chart of the S&P 500, and look and see what happens when the system works totally unregulated. Maybe you need to come to same realization that Greenspan did last week that the masses are incapable of policing themselves.
Posted by yird on October 28, 2008 at 11:12 p.m. (Suggest removal)
Cutting to the chase, it is the socialcrats like Obama, Dodd and Frank that kept the mortgage industry on it's negative tailspin so they could hang onto their simple minded base who thought they could satisfy their champagne appetite with a beer pocketbook.
Anybody ill informed to the point where they get sucked into purchasing a adjustable rate mortgage might eventually figure out as it is repossessed, that they should not have purchased it in the first place.
The loss will have an educational benefit that no school could ever offer and the person will end up smarter and stronger because of it.
Sadly the government keeps making mistakes that have no negative effect on those responsible.
Obama and Dodd, major recipients of mortgage company campaign donations, will continue to call for investigation into everyone but the guilty, themselves.
I don't know what Barney (sweet thing) Frank got but rest assured it was something. This guy is putrid!
Posted by exorcist_pencocky4u on October 29, 2008 at 8:09 a.m. (Suggest removal)
exorcist_pencocky4u - Maybe you should understand what socialism is before you start throwing the term around... please educate all of us why Obama is a "possible socialist" and that "he will drag us down the toilet".
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Sorry I was unable to respond yesterday but business called.
Canonman, do you and all your buddies that post here, hate America so much that you would be willing to inflict this Socialist, new world order, upon us?
Brother Obama, "is beyond a shadow of doubt" a Karl Marx/ Lenin/Mao/Castro style Socialist. They and all their followers over the ages have promised the poor and needy everything. Once they accuire power we will start to loose our freedom, step by step.
A true investigation of Democrat Party actions will reveal whats been causing our problems of late.