Doors shutting on homeowners

AL Foreclosure & Real Estate News

Article Abstract:  Hinds County foreclosures continue to increase. These increases are putting homeowners on the offensive in an attempt to combat foreclosures. The article shows how one Hinds County Alabama couple survived foreclosure.  For the rest of the Alabama foreclosure report, see the article below. 

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Chris Joyner • chris.joyner@jackson.gannett.com • February 29, 2008

Jackson resident Melody Weathersby was one day removed from a hospital stay for congestive heart failure when she got word her house was due to be sold at auction.

It was the latest and most severe in a series of problems with Weathersby's adjustable rate mortgage.

"I tried to negotiate, but they wouldn't," she said. "They wouldn't help."

Weathersby has plenty of company as the Jackson metro area feels the ripples of the nationwide mortgage crisis. According to real estate industry Web site foreclosure.com, Hinds County has about 450 active home foreclosures, a third of the statewide total, with most of the foreclosed homes concentrated in the neighborhoods of northeast or south Jackson. Madison and Rankin counties combine for another 91 foreclosures, according to the Web site.

Many foreclosures like Weathersby's bear the signs of a bullish real estate market in which brokers inked deals predestined to fail and buyers dangerously overextended themselves for a shot at home ownership.

Weathersby, 45, is medically disabled and her fixed income brings in about $1,200 a month. In 2004, she put down $1,000 on a modest, ranch-style house in south Jackson just south of McDowell Road. Her $55,000 mortgage came with an initial payment of $466 a month and was financed by Southstar Lending, a Florida-based firm that specialized in subprime loans.

Beginning in 2005, the interest rate on Weathersby's mortgage adjusted several times. By last spring, the monthly payment on her house had ballooned to $1,300, and she was thousands of dollars behind in payments.

"I didn't know it was going to keep going up when I got it," she said. "It seemed like an oversight because I really didn't know that's what I had. I thought I had a fixed interest rate."

Southstar, which filed for bankruptcy last year, sold the mortgage to Homecomings, a division of GMAC. Weathersby worked with the Neighborhood Assistance Corp. of America, a nonprofit advocate for homeowners, in an attempt to renegotiate her mortgage, to no avail.

"Her house was unaffordable when she went into the loan ... based on her fixed income," said NACA representative Latyrish Gee.

Gee said the situation in Jackson and around the state is bad and getting worse. NACA is working with hundreds of homeowners across the state to renegotiate their adjustable rate mortgages and save their homes.

"A lot of the lenders are working with us, so they are trying to make it better," Gee said. "We still have a few that do not want to see this thing turn over."

One of those is GMAC, which NACA has been negotiating with to stop foreclosure on Weatherby's home, she said. But GMAC said it is working with Weathersby and has not auctioned off the home.

GMAC spokesman Stephen Dupont said Weathersby's case has been referred to a special customer service group "who meet face-to-face with customers who are struggling with paying their mortgages."

Weathersby said she has never heard of the group, and no one has contacted her. In fact, she thought her home already had been sold and rushed to cart away her belongings late last week.

Weathersby said she talked with GMAC Thursday and found out the planned auction had been halted.

While her house is safe for now, less than a mile away Joe Osgood is preparing to move his family of five from their home, which is set to be sold on the Hinds County Courthouse steps in two weeks. Osgood said he tried to work with his lender to get into a refinancing program.

"They say we aren't qualified for it," he said.

This was Osgood's first attempt at home ownership. He got an adjustable rate mortgage 5 1/2 years ago from First Franklin Financial with a monthly note of $496.

Osgood said he knew the rate would adjust, but he never thought it would double.

"You know they aren't going to tell you that, because then you aren't going to buy," he said.

Sonya Murphy, head organizer of the Jackson chapter of the Association of Community Organizations for Reform Now, said community groups and state government need to start playing "hardball."

"We need someone to step in and say we are not going to have this in Mississippi," she said.

ACORN, as the group is known, is the nation's largest community organization of low- and moderate-income families.

Quentin Whitwell, executive director of the Mississippi Mortgage Bankers Association, said some lenders in the past several years "got creative" in selling risky new mortgages.

"As a result of that, there are bad loans and there are some problems. What we now have to do is face up to that," he said.

Charles Campbell, an economics professor at Mississippi State University, said the booming market encouraged owners to view their homes as a savings account, gambling on the notion interest rates would remain stable and home values wouldn't fall.

"All of those efforts really started making the price of housing rise faster than it otherwise would have done," he said.

John Allison, commissioner of the Mississippi Department of Banking and Finance, said the rising number of foreclosures got "egg on everybody's face."

"It was a lot of appetite for getting people in houses and people not paying attention to what they were getting into," he said.

Some lenders made "exotic" deals for interest-only mortgages or did not ask for proof of income, he said. But he said it appears out-of-state financing companies did most of that activity.

Allsion said a survey by his department last fall did not find Mississippi banks making such loans. They aren't likely to start now, but he said that doesn't mean the Jackson area has hit bottom. "There are still a good many loans nationwide that are in the pipeline."

Whitwell said the association is encouraging lenders now to work with borrowers to move their home loans into more traditional mortgages with easier-to-pay notes. At the same time, Whitwell said the current national "hysteria" could worsen the situation.

"People need access to capital in order for the economy to be good," he said. "Generally speaking, most bankers and mortgage bankers stuck to traditional forms of lending."

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