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Predatory lending report says foreclosures up 600% since '95; selling prices of homes tumble
By Phil Trexler Beacon Journal staff writer
Published on Wednesday, Sep 26, 2007
Foreclosures in Summit County have risen more than 600 percent since 1995.
More than half of all homes sold in Akron this year have been sold by banks at a fraction of their valuation.
The news comes from a report from a committee charged by Akron City Council to study predatory lending.
In the end, the committee blames the bleak numbers on the foreclosure scandal striking the housing market nationwide.
Foreclosures, the committee warns, affect all homeowners, wealthy and poor, who as a result of the filings will see vacant homes and decreased property values in their neighborhood.
The findings didn't surprise committee chairwoman Lolita Adair, an Akron real estate agent and housing advocate for 43
years. She had been warning others of the looming mortgage dangers since the late 1990s.
''I'm a people person and I don't like seeing little people with no defenses being used and seeing others gain. I don't think that is what this country is set up for and it bothers me,'' Adair said Tuesday.
The committee, appointed by council last December, recommends governmental action at the local, state and national level. And their recommendations go beyond educating home buyers.
Greed among federal bank lenders, the committee found, is the common thread of the foreclosure epidemic.
They say a plan initially designed to put more African-Americans, Hispanics, poor and credit-impaired buyers in their own home through relaxed mortgage restrictions ''became a tool used by enthusiastic mortgage lenders without discrimination.''
''Suggesting that the problems of predatory lending can be corrected by simply educating the consumer is like yelling to a drowning man and asking if he would like a life preserver,'' Adair wrote in her report.
The report indicates that the financial toll from the foreclosure crisis has yet to be fully calculated. But locally, one glaring issue is the decline of home prices in Akron.
Committee researchers tracked home sales in 10 Akron neighborhoods from February to August. Out of 590 sales, 466 had a lending institution as the owner.
Further, the study found, the sale prices on the bank- or mortgage lender-owned homes were almost always significantly lower than the county's valuation.
For example, Fannie Mae sold a Bank Street home in East Akron valued by the county at $45,030 for $5,000.
The study found that Akron's already aging housing stock is being further devalued by the low sales figures made by bank and mortgage companies.
The marketing by brokers of adjustable rate mortgages is largely to blame for the skyrocketing foreclosure numbers, the study found. Companies targeted low income and minority buyers with subprime mortgage rates that eventually increased, leaving the buyer unable to pay.
An urgency to sell mortgages and increase lender profits fueled the foreclosure scandal, Adair said.
''It is insulting the intelligence of the American public to continue to tout the desire to help the low to moderate, income impaired borrower when, in fact, the name of the game is profit,'' she wrote in her report.
Adair said Tuesday that she hopes the study will foster change and create a working relationship between banks and borrowers in order to avoid foreclosures and vacant homes.
''My hope was that this report would, No. 1, alert the public to the point that the federal banks, who feel that the states have no control over them, will be embarrassed enough that they will start looking at these foreclosures and start working with these people,'' Adair said.
Phil Trexler can be reached at 330-996-3717 or ptrexler@thebeaconjournal.com.
Foreclosures in Summit County have risen more than 600 percent since 1995.
Get the full article here.
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