Toledo makes top numbers in another list…not one I think we want
On the heels of yesterday finding out that Toledo was ranked in the 100 best communities to raise young people comes the news that Toledo is ranked 30th-worst among the nation’s largest 100 cities for home foreclosures.
According to the Toledo Blade we at least were not the worst City in Ohio, not much consolation but it does demonstrate given that Detroit is Number 1 that this is a problem that is being shared geographically rather than it being soley something that our City is experiencing in this region.
Dan Lepkowski as quoted in the Toledo Blade makes an excellent point, I know from personal experience on paper what was said we could afford was in reality more than we wanted to spend when we were looking at a mortgage:
“A lot of these homes are bought based on dual incomes and when one spouse gets laid off or fired, then they can’t swing it,” he said. “I think there may be cases where some lenders will qualify you for a lot more house than maybe is financially responsible.”
I also think the dual income aspect of this correct, most of the people I do know that have dual incomes have done so to be able to afford the home or the lifestyle that they want and it’s not as easy to replace that income for quite a few people. My neighbor as an example worked for Farmer Jack making a fairly decent hourly wage, now she is working for minimum wage at a day care center.
As a mortgage broker, I am taking the reporting of the Toledo foreclosure ranking a bit personally. Dan Lepkowski is a true professional and is correct about lenders being able to qualify people for more home than they can responsibly afford. But qualifying for the loan and accepting it are two different things. I can explain available options and discuss the potential risks, but ultimately the borrower decides what risks they are willing to accept.
For Q3/2006, the national foreclosure rate for FHA loans was 2.28%, which is more than five times the foreclosure rate for conventional loans. Does this mean we call the program a failure? If you report the same numbers as the glass being half full it means over 97% of the borrowers did not go through foreclosure, many of whom would not have been able to buy or remain in a home without the program. With all the for sale signs in front of Toledo homes now, being able to qualify more buyers is definitely a good thing. The national foreclosure rate for sub prime loans was higher at 3.86%, but the same principle applies.
http://www.consumeraffairs.com/news04/2006/12/mortgage_delinquencies.html
With the recent law changes, Toledo City Council and the Ohio Legislature did a huge disservice to this area by eliminating some of the tools that when used responsibly, can help more people buy and/or keep their homes.
January 26th, 2007 at 5:05 pmThanks for the additional information and the insight Bob, I agree with you that it is up to the home buyer to take the time to see what they can really afford in reality versus on paper.
January 26th, 2007 at 5:21 pm