November 23, 2014

Elyria
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Foreclosures on the rise

ELYRIA — Lorain County residents are losing their homes to foreclosure at an alarming rate.
Civil court records show that 1,188 foreclosures were filed in the first half of this year, compared with 1,935 filed in all of 2006.
In the first quarter of this year, 627 foreclosures were filed, compared with 448 in the first quarter of 2006.
Clerk of Courts Ron Nabakowski, who has tracked the rate, said if the trend continues, there could be as many as 2,200 of them by the end of the year.
“The court system has become a collection agency,” said Nabakowski, whose staff is inundated processing foreclosures. “It breaks your heart, but the law is the law.”
Nabakowski is quick to point the finger when asked why the rate is so high, blaming about anyone who had anything to do with the financial industry in the last two decades.
When the banking system was deregulated in the 1980s, it opened doors to many who previously could not qualify to buy a house. Lending rules were relaxed, and mortgage companies could offer subprime loans, introducing adjustable rate mortgages.
The changes laid the foundation for the financial crisis being faced by families across the country today, he said.
Political liberals and aggressive business people pushed subprime loans — higher interest rate loans — to people who couldn’t qualify for conventional bank loans, “and this is what’s happened,” Nabakowski said.
“Home ownership is now going down, not up. People are losing their homes, and about 9 percent of all subprime loans are going to refinancing; people are taking subprime loans to get out of other debt and then end up losing their homes,’’ he said. “So, we have more people losing homes than who are able to buy them.”
He said at the same time of the banking system deregulation, financial institutions and credit card companies lured customers with the promise of big credit limits and low minimum payments.
Consumers began enjoying lifestyles beyond their incomes by maxing out their credit cards. But, if you’re a little late with one payment, the interest on that multi-thousand-dollar credit card balance could jump from 9 percent to 30 percent.
“There’s no way people could ever get out from under the debt,” Nabakowski said.
In one instance, he said, a Cuyahoga County woman had a $2,000 credit card bill and, after having paid on it for years, owed $3,000 more than she had borrowed.
“Even the judge called it unconscionable and threw it out,” Nabakowski said.
Ten years ago, foreclosures were rare, seen only in homeowners that had suffered a major crisis — the breadwinner unexpectedly died, or a medical emergency wiped out the family’s resources.
“Now, we see foreclosures are all over the place — in very upscale neighborhoods, low-income neighborhoods; they’re all over the place,” Nabakowski said.
“People are living on their paychecks along with credit cards and it eventually catches up with them. They’ll refinance their house to try to get out of debt, only to end up deep in debt late in their life, the rest of their life.”