Facing Foreclosure? Don’t Leave. Squat!

In an  interview earlier this year, Ohio Rep. Marcy Kaptur told Americans: ‘Be squatters in your own homes. Don’t you leave.’

Marcy Kaptur of Ohio is the longest-serving Democratic congresswoman in U.S. history. Her district, stretching along the shore of Lake Erie from west of Cleveland to Toledo, faces an epidemic of home foreclosures and 11.5 percent unemployment. That heartland region, the Rust Belt, had its heart torn out by the North American Free Trade Agreement, with shuttered factories and struggling family farms. Kaptur led the fight in Congress against NAFTA. Now, she is recommending a radical foreclosure solution from the floor of the U.S. Congress: “So I say to the American people, you be squatters in your own homes. Don’t you leave.”

She criticizes the bailout’s failure to protect homeowners facing foreclosure. Her advice to “squat” cleverly exploits a legal technicality within the subprime-mortgage crisis. These mortgages were made, then bundled into securities and sold and resold repeatedly, by the very Wall Street banks that are now benefiting from TARP (the Troubled Asset Relief Program). The banks foreclosing on families very often can’t locate the actual loan note that binds the homeowner to the bad loan. “Produce the note,” Kaptur recommends those facing foreclosure demands of the banks.

“[P]ossession is nine-tenths of the law,” Rep. Kaptur told me. “Therefore, stay in your property. Get proper legal representation … [if] Wall Street cannot produce the deed nor the mortgage audit trail … you should stay in your home. It is your castle. It’s more than a piece of property. … Most people don’t even think about getting representation, because they get a piece of paper from the bank, and they go, ‘Oh, it’s the bank,’ and they become fearful, rather than saying: ‘This is contract law. The mortgage is a contract. I am one party. There is another party. What are my legal rights under the law as a property owner?’ “If you look at the bad paper, if you look at where there’s trouble, 95 to 98 percent of the paper really has moved to five institutions: JPMorgan Chase, Bank of America, Wachovia, Citigroup and HSBC. They have this country held by the neck.”

Kaptur recommends calling the local Legal Aid Society, Bar Association or 888-995-4673 for legal assistance.

The onerous duty of physically evicting people and dragging their possessions to the curb typically falls on the local sheriff. Kaptur conditions her squatting advice, saying, “If it’s a sheriff’s eviction, if it’s reached that point, that is almost impossible.” Unless the sheriff refuses to carry out the eviction, as Sheriff Warren C. Evans of Wayne County, Mich., has decided to do. Wayne County, including Detroit, has had more than 46,000 foreclosures in the past two years.

After reviewing TARP, Evans determined that home foreclosures would conflict with TARP’s goal of reducing foreclosures, and that he’d be violating the law by denying foreclosed homeowners the chance at potential federal assistance. “I cannot in clear conscience allow one more family to be put out of their home until I am satisfied they have been afforded every option they are entitled to under the law to avoid foreclosure,” he said.

Bruce Marks of the Boston-based Neighborhood Assistance Corp. of America is taking the fight to the homes of the banks’ CEOs. Last October, as the TARP bailout was shaping up to benefit Wall Street and not Main Street, NACA blockaded the entrance of mortgage giant Fannie Mae until it got a meeting with executives there. Now NACA is working with Fannie Mae to restructure mortgages. Marks is organizing a nationwide, three-day “Predator’s Tour,” going to the CEOs’ homes to demand meetings with them. He told me: “This is what we’re going to do with thousands of homeowners, go to their (the CEOs’) home and say: ‘I want you to meet my family. I want you to see who you’re foreclosing on.’ … If they’re going to take our homes, we’re going to go to their homes, and we’re going to tell them, ‘No more.’ ”

Before the inauguration, Larry Summers, the chair of President Obama’s National Economic Council, promised congressional Democratic leaders to “implement smart, aggressive policies to reduce the number of preventable foreclosures by helping to reduce mortgage payments for economically stressed but responsible homeowners, while also reforming our bankruptcy laws and strengthening existing housing initiatives.”

According to a report by RealtyTrac, “Foreclosure filings were reported on 2.3 million U.S. properties in 2008, an increase of 81 percent from 2007 and up 225 percent from 2006.” As the financial crisis deepens, people facing foreclosure should take Kaptur’s advice and tell their bankers, “Produce the note.”

Foreclosures rock some near-by Detroit suburbs Hard

While Detroit is known nationally for its high foreclosure rate, the problem is worse in three suburbs.

Hazel Park, Eastpointe and Pontiac all had higher rates than Detroit, according to a Free Press analysis of metro area foreclosures over the past 3 1/2 years.

“The industrial base of Detroit is supported by the areas around it, so therefore it is not just Detroit that is suffering,” said Marshall Mandell, a foreclosure specialist for Re/Max Classic in Farmington Hills.

Among metro area ZIP codes, Detroit’s 48205 had the highest foreclosure rate, at one out of every 5.2 households, according to data compiled by RealtyTrac Inc. of Irvine, Calif.

By city, Hazel Park was highest, with one foreclosure for every 8.2 households. Eastpointe and Pontiac ranked second and third with rates of 8.3 and 9.2, respectively.

Detroit and its 25 ZIP codes took fourth place with a rate of one foreclosure for every 9.3 households. And it had the highest number of foreclosed homes, with 37,727 bank repossessions from January 2006 through August 2009.

The average metro rate is one foreclosure for every 15.5 households, the analysis found.

Foreclosure epidemic slams suburbs

Two blocks north of 8 Mile in Hazel Park, for sale signs are nearly as abundant as potholes on George Avenue.

The city, all contained in the 48030 ZIP code, is struggling with the highest foreclosure rate in metro Detroit.

One out of every 8.2 households has been repossessed by the lender from January 2006 through August 2009, according to a Free Press analysis of ZIP code data compiled by RealtyTrac Inc. of Irvine, Calif.

“One of the reasons we’re not surprised by this data is we were the No. 1 recipient of subprime loans in Oakland County,” said Ed Klobucher, Hazel Park’s city manager. “Foreclosure is a national problem. Even though we didn’t create it, we have to solve it.”

Eastpointe and Pontiac ranked second and third with rates of 8.3 and 9.2, respectively. Detroit ranked fourth with one foreclosure for every 9.3 households.

The foreclosure epidemic spread throughout metro Detroit, hitting nearly every community.

Birmingham had one foreclosure for every 20.8 households; Dearborn Heights had one foreclosure for every 13.2 households, and Washington Township had one foreclosure for every 12.7 households.

Communities with the lowest rates include Pleasant Ridge, with one foreclosure for every 69.6 households; Wixom, with one for every 58.7 households, and Huntington Woods, with one for every 51.3 households.

Hazel Park officials are utilizing federal and state money to help solve the problem and have an aggressive city program to deal with foreclosures. It received $1.6 million in federal Neighborhood Stabilization Program funds earlier this year.

The city is using some of that money to tear down abandoned homes in bad shape and fuel the rehabilitation of older, occupied homes.

“We are going to try to turn this crisis into an opportunity to improve our housing stock,” Klobucher said.

A drive down George Avenue shows the challenges — vacant homes with weedy lots next to neatly tended homes and a number of vacant lots.

Marshall Mandell, a foreclosure specialist for Re/Max Classic in Farmington Hills, has a bank-owned house for sale on George Avenue in Hazel Park for $9,900.

The two-bedroom, two-bath house has 881 square feet and a detached garage.

He has been handling bank-owned homes for more than six years in Michigan. He said he has his theories about why Hazel Park has suffered more than other cities. Being over the 8 Mile border from Detroit makes it a bit more expensive, and the housing stock isn’t as nice as Detroit’s in some cases.

“I think it would be very difficult to determine why that happened. It could be that those are areas where people are leaving the state and abandoning their homes,” Mandell said.

Another possibility is that overall home prices have fallen so far across metro Detroit that some areas unattainable in the past are now within reach of more people’s budgets, making the lower-priced areas less appealing.

“You can buy a home in West Bloomfield for $250,000 that is a newer, beautiful four-bedroom, two-bathroom home,” Mandell said.

“It’s just amazing, and the prices are still falling.”

Once-popular Detroit ZIP code now plagued by empty homes

Welcome to 48205 — the Detroit ZIP code with the highest foreclosure rate in the metro area over the past three years.

The area is in the northeast corner of the city, just south of Warren and west of Harper Woods. Gratiot bisects the ZIP code.

It had been one of the city’s most stable neighborhoods, known for two- and three-bedroom bungalows. Many city employees, particularly police and firefighters, lived in the area.

It was served by numerous Detroit schools, many now shuttered. For decades, the area’s children swam in the summer and skated in the winter at the Heilmann Community Center.

But 48205 now has the highest foreclosure rate, at one out of every 5.2 households, according to a Free Press analysis of the past 3 1/2 years of ZIP code data compiled by RealtyTrac Inc.

And despite the large number of homes for sale — 143 at latest count — you won’t see many for sale signs in the ground.

The houses for sale, mostly foreclosures, range in price from $50 to $49,900, according to Realcomp, the Farmington Hills-based multiple listing service.

“It’s a tool to use to break into the house or a car,” said Albert Hakim, a foreclosure specialist with Re/Max Associates in St. Clair Shores.

Hakim, who has a number of listings in the neighborhood, took the Free Press on a tour recently.

He showed one house on Edmore at the northern end of the ZIP code. The house sold for $135,000 two years ago, he said.

The house, in foreclosure but not stripped of its copper plumbing or kitchen appliances, is listed by the bank for $19,900. It has three bedrooms and 1.5 baths in 1,200 square feet.

It sits on a street of mostly tidy, occupied brick homes. The lawns are tended and pots of flowers grace some front porches and yards.

But a few blocks south, the neighborhood takes on a more abandoned feel with vacant lots, boarded-up and burned-out houses and trash dumped in tall grass on yards.

“It’s the type of neighborhood where your taxes are more than your house is worth,” Hakim said. “That’s one of the reasons it is so hard to sell a house there.”

Chart: Top 50 foreclosure rates in region by ZIP code

Top 50 foreclosure rates in region by ZIP code
County	City	ZIP code	Repossessions	Foreclosure rate*
Wayne	Detroit	48205	4,166	5.23
Wayne	Detroit	48224	3,718	5.34
Wayne	Detroit	48228	4,407	5.6
Wayne	Detroit	48219	3,305	6.9
Livingston	Hamburg	48139	6	7
Wayne	Detroit	48234	2,377	7.06
Wayne	Detroit	48235	2,816	7.27
Wayne	Detroit	48227	3,067	7.34
Wayne	Detroit	48223	1,723	7.88
Macomb	Warren	48089	1,639	8.15
Oakland	Hazel Park	48030	924	8.21
Macomb	Eastpointe	48021	1,623	8.34
Wayne	Detroit	48221	2,078	8.36
Oakland	Pontiac	48342	912	8.69
Oakland	Pontiac	48341	898	8.96
Wayne	Redford Township	48240	806	9.23
Oakland	Southfield	48075	1,045	9.3
Oakland	Pontiac	48340	1,027	9.98
Oakland	Southfield	48076	1,100	9.98
Wayne	Redford Township	48239	1,518	10.04
Wayne	Harper Woods	48225	636	10.4
Macomb	Warren	48091	1,286	10.44
Wayne	Inkster	48141	1,122	10.71
Wayne	Detroit	48238	1,714	10.88
Wayne	Melvindale	48122	438	10.89
Macomb	New Haven	48048	182	11.14
Wayne	Ecorse	48229	430	11.17
Wayne	Detroit	48213	1,409	11.18
Wayne	Dearborn	48126	1,511	11.19
Wayne	Dearborn Heights	48125	813	11.24
Wayne	River Rouge	48218	363	11.41
Wayne	Romulus	48174	1,010	11.52
Wayne	Detroit	48206	1,226	11.66
Wayne	Lincoln Park	48146	1,427	11.72
Wayne	Highland Park	48203	1,589	11.83
Wayne	Detroit	48204	1,465	11.93
Macomb	Washington	48094	419	12.09
Lapeer	North Branch	48461	221	12.15
Lapeer	Otter Lake	48464	71	12.15
Livingston	Fowlerville	48836	333	12.45
Wayne	Westland	48186	1,168	12.77
Oakland	Oak Park	48237	1,006	12.81
Macomb	Roseville	48066	1,625	12.92
St. Clair	Capac	48014	101	13.46
Macomb	Mt. Clemens	48043	572	13.54
Wayne	Detroit	48217	316	13.57
Macomb	New Baltimore	48047	908	13.65
Wayne	Detroit	48210	1,070	13.71
Wayne	Hamtramck	48212	1,251	13.71
Lapeer	Columbiaville	48421	196	13.74
*Represents 1 foreclosure per X number of households. For example, the rate in ZIP code 48205 is 1 for every 5.23 households.

Foreign Investors: U.S. Real Estate to Recover in the Second Quarter of 2010

Foreign real estate investors say they expect to see a recovery in the U.S. real estate market by the end of the second quarter of 2010, according to the results of a new survey released by the Association of Foreign Investors in Real Estate (AFIRE).   read article here

Bargain-hunters eye real estate: Barclays

NEW YORK (Reuters) – More investors are likely to move capital into real estate over the next couple of years to scoop up bargains even as the distress that has long plagued residential real estate broadens and takes hold in the commercial sector, a top restructuring expert said.

“A lot of the investors I’m hearing about are now thinking of shifting their focus to real estate, because that’s where they see the opportunities,” said Mark Shapiro, head of global restructuring and finance at Barclays Plc’s (BARC.L: Quote, Profile, Research, Stock Buzz) Barclays Capital, speaking at the Reuters Restructuring Summit in New York. “That’s probably where you’re going to see capital shifting.”

Asked where in the sector these opportunities would arise, he said, “The whole gamut.”  read full article here

Facing foreclosure? Don’t pack just yet

Banks are starting foreclosures and then walking away. It may sound like a gift, but you’ve got to know how to protect yourself from the legal fallout. read story here

Detroit’s fight against vacant land gets tougher. Tax foreclosures skyrocket

In case anyone doubted it, Detroit’s vacant land problem, already bad, is getting worse in a hurry.

The number of tax-delinquent properties listed for sale in Wayne County’s annual auction beginning Oct. 19 has swelled to almost 9,000 this year, from about 2,000 properties in 2007, said Terrance Keith, Wayne County’s deputy treasurer.

The vast majority of those parcels are vacant lots in Detroit, he said, and most are unlikely to find buyers at the annual tax auction.

Detroit already suffers more vacancy than any city in the nation, except perhaps post-Katrina New Orleans, urban planners and academic researchers said. An estimated 40 square miles of the city’s 139 square miles of land are now vacant, an amount of land roughly the size of San Francisco or Boston.

The extent of the tax foreclosures underscores the efforts by Mayor Dave Bing, planners and activists in and out of city government to find new purposes for the land, including urban agriculture and greenways.

The foreclosure crisis has added significantly to the problem. Detroit’s Office of Foreclosure Prevention said last week that 17.3% of Detroit’s residences had gone through foreclosure through the end of 2008, with many more added this year.

Some fear tax auctions only add to problem of abandoned property

At the corner of Freud and Dickerson on Detroit’s east side, a parcel of vacant land stretches seemingly for blocks without a single house or other structure on it.

Five lots on that stretch will go up for auction in mid-October as part of Wayne County’s annual sale of properties seized because of unpaid property taxes. The lots are small, 30 to 40 feet wide by 100 feet deep, and in a better real estate market, they might fetch a buyer.

But there’s a good chance they won’t sell at all, because most properties offered at the county’s annual land sale don’t, said Terrance Keith, Wayne County’s deputy treasurer. And that means those lots might stay in the county’s inventory or revert to the City of Detroit, which already owns tens of thousands of unwanted parcels.

Huge problem is growing

The county’s annual auction, which is to be held this year beginning Oct. 19, provides a look at Detroit’s vacant-land problem. That problem is huge, and it’s growing.

The latest U.S. Postal Service data show that as of June, about 17% of Detroit’s addresses appeared to be vacant. That didn’t count thousands of other vacant lots to which the postal service no longer tries to deliver mail.

Two years ago, during the 2007 auction, the county listed about 2,000 tax-delinquent properties for sale, Keith said. This year, following the collapse of the real estate market and the nation’s economy, almost 9,000 properties are to go on the block during the auction, which can last up to three days.

The vast majority of those parcels are vacant lots in Detroit, Keith said, and if history is a guide, most of those won’t sell.

The problem of what to do with tax-foreclosed property is a question contained within the larger debate about Detroit’s growing vacancy. Planners and activists have suggested many solutions, from turning the land into urban farms to somehow repopulating it with the help of billions of dollars in federal aid, if such aid ever becomes available.

In the meantime, many critics said that using a tax-foreclosure auction to dispose of the land probably makes the vacancy problem worse, not better.

Speculators take advantage

Margaret Dewar, a professor of urban planning at the University of Michigan, said last week that the most common buyers at tax auctions are speculators, based either locally or around the country. They hope to buy cheap land and flip the properties for a quick profit.

She contended that more deserving groups that should get control of the land, like neighborhood community nonprofits or homeowners who want to buy the lot next to them, often lose out to the speculators.

“Tax auctions are a very bad mechanism for taking any control of what your city becomes,” Dewar said.

Dan Kildee, the treasurer of Genesee County, where Flint is located, also dislikes the auction process. Kildee chairs the Genesee County Land Bank and arranges for sales of tax-delinquent land on a negotiated, parcel-by-parcel basis, cutting out speculators.

“It’s pretty unusual that the auction produces a responsible investor,” Kildee said.

In a notable example of what can happen, two local speculators bought a parking lot belonging to the Perfecting Church on Detroit’s east side at the county’s 2003 tax auction without the knowledge of the church, which didn’t realize its lot was being auctioned off in error.

The buyers offered to sell the lot back to Perfecting Church. The church sued instead, but it had to go all the way to the Michigan Supreme Court before getting its property back.

How the process works

Keith agreed that that the auction method of disposing of surplus property isn’t the best. It just happens to be the one outlined under state law, and one that almost all counties in Michigan use.

Keith said he would like to see changes in state law making it easier for property owners to avoid foreclosure and hang on to their properties, so the parcels don’t wind up in the annual auction.

In the meantime, the county will carry on with the annual sale. There are actually two auction sales each year. The first, in mid-September, requires buyers to bid at least the amount of delinquent taxes due on a property, which can run into many thousands of dollars.

Few people buy at that sale, waiting for the follow-up auction in mid-October, when the minimum bid drops to $500 per parcel.

Keith used the example of a vacant building with $15,000 in delinquent taxes due on it. “In a hot economy, the $15,000 would be a bargain,” he said. “In the economy that we have now, that’s an outrageous price, a significantly overstated value, given the market conditions.”

Other counties also auction properties seized for delinquent property taxes, but no county has the volume that Wayne County does because of the Detroit parcels.

Oakland County, for example, will auction tax-delinquent property beginning Oct. 13, but the county treasurer’s Web site lists only a few hundred parcels for sale.