A Great Equalizer

No one is immune as local foreclosures rise - and rise

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ANDY MEEK | The Daily News

Tamara Mitchell-Ford - the ex-wife of former state Sen. John Ford - dodged a foreclosure sale of her two-story East Memphis home this week the same way scores of cash-strapped debtors do in Memphis. She filed for bankruptcy protection.

Doing that prevented an auction of the four-bedroom, four-bath house originally scheduled to occur Tuesday on the Shelby County Courthouse steps.

Mitchell-Ford's predicament no doubt garnered media attention because of her last name. By marrying Ford, who was sentenced to prison this summer on federal bribery charges, she joined one of the most prominent family dynasties in Tennessee.

But it should go without saying that the consequences of getting financially over-extended, accepting risky mortgage plans and falling behind on monthly payments are, of course, no respecter of persons.

Third quarter foreclosure numbers released this week show that a growing number of Memphis homeowners are - like Mitchell-Ford - trapped in the same financial pinch and likewise in danger of losing their homes.

Jump? How high?

The total number of foreclosure notices from July through September of this year saw a 24 percent jump from Q3 2006 and a 37 percent jump over Q3 2005, according to real estate information company Chandler Reports, www.chandlerreports.com.

Homeowners in neighborhoods from Raleigh to Frayser to Westwood appear to be among the worst off. Most first-run foreclosure notices, as well as the actual foreclosure sales, concerned homes in those communities.

The Daily News tracks foreclosure notices - notices of potential foreclosure sales - as well as the sales that go all the way through the process.

"I think this problem will get wider, and I think that as more and more (adjustable rate mortgage) loans reset - my guess is that in many of the interior communities here, what's happened is we're beginning to see a wave of refinances that are subprime and now resetting," said Corky Neale, director of research and innovation at the RISE Foundation (Responsibility, Initiative, Solutions and Empowerment).

"I suspect that that's much more likely than first-time home buyers or people who are coming to the community for the first time."

He was referring to the difficulty some homeowners now are facing in adapting to things such as adjustable rate mortgages, loans that may have carried low "teaser" rates early on but are now re-setting their rates.

That "sticker shock," plus loan defaults and a host of other negative financial trends, suggests that the logjam of problems in the housing market pipeline has yet to be broken and returned to its normal level.

Eye-popping revelations

A review of third quarter foreclosure data offers more evidence of that fact. In tracking the spread of foreclosures through the Memphis housing market, another eye-opener is a list of the most recent top residential sellers.

Many of those sellers are no longer "traditional" homebuilders, but banks - the implication being that one reason a bank acquires homes to sell in the first place is through seizing them at foreclosure.

Deutsche Bank National Trust Co. was No. 2 on a list of top residential sellers year-to-date, posting 462 sales totaling a little more than $27 million from January through September of this year.

The only entity posting more sales in that same period was the U.S. Department of Housing and Urban Development, which recorded 804 local sales totaling more than $40 million.

Factors besides the obvious ones - perpetually late mortgage payments, for example - also appear to have a hand in sketching the local foreclosure picture.

"One of the interesting things I just heard is some of the newly annexed areas - in (Cordova's) Berryhill, for example - are getting whacked because banks neglected to collect ahead of time for the new city taxes," said Steve Lockwood, executive director of the Frayser Community Development Corp. "So they're having to double up in the first year - they're collecting for this year and next year."

Upside down, inside out

The local communities that saw the biggest Q3 jumps in foreclosure filings quarter-over-quarter included a few surprises.

In Cordova's 38016 ZIP Code, Q3 foreclosure notices climbed 151 percent from 2005 through 2007. In the 38002 ZIP Code shared by Arlington and Lakeland, Q3 notices are up 146.2 percent from 2005 through 2007.

"The Arlington/Lakeland results, that's probably due to new housing construction, people who are coming to the neighborhood for the first time and probably in brand new houses," Neale said. "People were essentially buying more house than they could afford.

"Now, with Cordova, I'm not at all surprised about that one. We'd been seeing that before - earlier this year - that Cordova has a fairly substantial increase in terms of foreclosures. And housing prices in Cordova are probably twice what they are in Frayser and Raleigh."