When the recession struck in full force in 2008, the housing market was one of the hardest hit industries. Transactions came to an abrupt halt. Houses were no longer being built. No one was buying or selling, and those who already had mortgages, could no longer afford to pay them.
Foreclosure numbers tripled. While the economy has started to improve over the last year, the housing market has been one of the slowest industries to bounce back. According to the North Carolina Administrative Office of the Courts, in 2013, Macon County reported 200 foreclosures, with Jackson County reporting 256. So far this year, Macon County has recorded 34 foreclosures and Jackson County reported 82, with 58 of those being last month alone.
Tom Luzon, director of Foreclosure Prevention Loan Fund with OnTrack Financial Education & Counseling, works each month to connect members of the community and pull resources to help residents avoid foreclosure. On- Track Financial is an accredited, non-profit financial counseling and education agency, that will celebrate its 40th birthday this coming August.
Although headquartered in Asheville, they counsel in 11 other locations throughout Western North Carolina. The OnTrack team offers financial counseling where clients learn financial tools that help them achieve their financial goals, holding counseling for both tenants and homeowners, debt management plans to help folks pay off credit cards in a manageable and faster way, foreclosure prevention services to help folks keep their homes in tough times, and a number of education programs aimed at adults and youth.
Through his work with OnTrack, Luzon said that the most common cause of foreclosures is a result of the job market. “The most common cause of foreclosures in our area is job loss, and business slow down for self-employed folks,” he said. “Many Western North Carolina industries have either consolidated or moved overseas.”
Brodie Murphy, Home Loan Specialist with Carolina Farm Credit based in Murphy, said that since working to serve the Macon County area with financing options, he, too, has seen job loss as being an underlying factor. “I would say the most common cause for foreclosures is job loss, divorce, medical reasons and death,” said Murphy. “Also, some lenders can be at fault because they were trying to push mortgages through left and right and not collecting proper income verification and property information.”
Carolina Farm Credit provides home loans for Macon County residents. Specializing in large acreage purchases, Murphy is familiar with the Macon County terrain and what has been adversely affecting the market to lead to foreclosures.
When the effects of the recession first began to manifest, Luzon explained that no one was excluded from experiencing financial hardship. “The foreclosure crisis has been going on since 2006,” said Luzon. “Initially, we saw a lot of folks who had subprime and dangerous mortgages. A dangerous mortgage is one that is designed to increase and make the payment unaffordable for the homeowner, sometimes called 'predatory loans.' These also were folks who tended to be in entry level, light skilled type jobs. Over the years, you could see the foreclosures making its way up the economic ladder, now reaching people that would be considered middle to upward middle class, losing jobs or companies where they have been for years.”
The rural terrain of Macon and Jackson counties makes it harder for those who lose a job to bounce back. “I am not sure if being 'rural' in nature actually increases foreclosures, except for the fact that it means there are fewer other opportunities to recover and get back on your employment feet again,” said Luzon. “Our area has a large proportion of self-employed folks, due to the lack of large employers, and a lot of small businesses are experiencing the collateral damage of the area job losses.”
The rural demographic of Macon County is what Murphy and Carolina Farm Credit have focused on to help people recover from the recession. “Our niche is properties with large acreage, which we see often in Macon County,” said Murphy. “If there is a dwelling on the property then the dwelling value must represent at least 35 percent of the loan amount. We have flexible appraisal guidelines as we let appraisers go back a two to three-year period and 30-mile radius when finding comparable sales. Most banks will only let appraisers go back a 12- month period.
"We have competitive adjustable and fixed interest rates with terms up to 30 years and offer 100 percent financing programs through our USDA and VA mortgage, and 96.5 percent financing through our FHA mortgage. These are great loan programs for someone that may be limited on assets for a down payment or closing costs, plus they offer low fixed interest rates up to 30 years. We offer land loans with up to 75 percent financing with terms up to 20 years. We have a construction loan product with up to 85 percent financing and allows for the borrower to use equity in the land for the down payment.”
Even though foreclosure numbers are staying in the double digits month after month, Luzon said that he believes the most common misconception about those affected are that they are alone. “I think people tend to think of themselves as the only ones going through it, that there is no help or options out there, and that the mortgage lender is always 'right,'” said Luzon. “Many people, along with their neighbors and friends, are struggling to make ends meet and keep their homes. There is help out there in regards to communicating with lenders, finding out your best home retention options, and the Mortgage Payment Protection (MPP) program that will bring folks current if they have fallen behind, and make the mortgage payment so the homeowner can do a job search or attend a schooling/training program to learn a new more viable career field. Though mortgage lenders are good, they are not perfect, and they do make mistakes. Trained counselors are excellent resources to correct mistakes that could needlessly cost people their homes.”
Last month alone Jackson County recorded nearly 60 new foreclosure filings, a sign that the market may be leveling out, but not yet improving. “I am sorry to say that I really don’t see things improving as yet," said Luzon. “Right now, improving would mean 'not getting worse.' There are so many folks out there really trying to find work, and expanding their search area, making it bigger and bigger to where it becomes a national search. I have had clients from here, take jobs in North Dakota. Improvement, in my opinion, is directly tied to employment opportunities rebounding. A lot of people have the misconception that if the unemployment rate goes down, that is an automatic 'good' sign. But it really isn’t a good sign if it goes down because benefits have been exhausted and people have just flat out stopped looking for work.”
As of February of this year, OnTrack Financial Education & Counseling started offering local information sessions to help people determine if they are eligible for mortgage payment assistance from the N.C. Foreclosure Prevention Loan Program.
The N.C. Foreclosure Prevention Fund makes mortgage payments for qualified unemployed workers, including returning veterans, while they look for jobs or complete job training. The program is offered statewide by the N.C. Housing Finance Agency (NCHFA) and funded by the U.S. Department of the Treasury. On-Track Financial Education & Counseling (OnTrack WNC) is NCHFA’s program partner responsible for helping consumers in western North Carolina. Statewide this foreclosure prevention effort has helped 15,000 North Carolinians who lost jobs. On-Track WNC has helped more than 600 families in Western North Carolina obtain almost $13 million worth of assistance.
For more information about OnTrack WNC’s services visit www.ontrackwnc.org or call 1-800-737-5485.