A Bane Amid The Housing Boom: Rising Foreclosures - PhillyBlog

Dave · #1 (**permalink**) 05-30-2005, 04:48 PM

http://www.washingtonpost.com/wp-dyn...052900972.html

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PHILADELPHIA -- To walk Thayer Street in northeast Philadelphia is to count, door by door, the economic devastation afflicting a working-class neighborhood. On a single block, 18 of the 42 brick rowhouses have gone into foreclosure in the past three years.

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Foreclosure rates rose in 47 states in March, according to Foreclosure.com, an online foreclosure listing service. The rates in Florida, Texas and Colorado are more than twice the national average. Even in New York City and Boston, where real estate markets are white-hot, foreclosures are rising in working-class neighborhoods.

Virginia, Maryland and the District have relatively low foreclosure rates -- analysts say troubled owners in those booming markets can still sell their homes before facing foreclosure.

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At first glance, the high foreclosure rates in Pennsylvania seem paradoxical. The average Pennsylvania homeowner has one of the highest credit scores in the nation, saves more than the average American, and is less likely to be unemployed or divorced.

But the Reinvestment Fund, a Philadelphia-based think tank, analyzed 22,979 foreclosures for the state Banking Department and found a more problematic profile. Those homeowners, most of whom are blacks, Latinos or working-class whites, live close to the economic margin.

They have low incomes and little or no health insurance -- 40 percent of those who sought emergency foreclosure help cited medical costs as the cause of their distress.

"For lots of these folks, homeownership is a dangerous, precarious existence," said Ira Goldstein, policy director for the fund. "Foreclosures can become like a contagion in these neighborhoods."

Few of these homeowners were tutored in home buying, and 70 percent relied on "subprime" mortgage brokers, which specialize in buyers with bad credit and charge interest rates between 8 and 12 percent, far above market interest rates of 6 percent or less.

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Pennsylvania's foreclosure problem is not just an urban phenomenon. Montgomery County contains a genteel stretch of suburbs north of Philadelphia. But from 2000 to 2003, county officials recorded almost 5,000 foreclosure filings, a 14.6 percent increase. Arline, Woodland and Lindbergh avenues run through Abington, a pleasant lower-middle-class town with ranch houses and cherry trees, children's slides and neatly tended gardens. On each of these blocks, three or four houses have gone into foreclosure in the past four years.

Unlike those in northeast Philadelphia, the houses are easily resold -- the foreclosed-upon homeowners tend to simply fade away. "We bought this in a foreclosure auction a year ago," Becky Morrison, a mother of three, said as she stood in the doorway of her house in Abington. "We rented it back to the previous owner. She was pretty sick -- I think she had trouble with her bills. I'm not sure where she went."

mikeg · #2 (**permalink**) 05-30-2005, 06:24 PM

I don't understand why everyone these days tends to think that maximum cash flow is that way to go, living beyond their means, putting zero down, buying a large SUV, renting a place at the shore.... people have no dicipline these days.

Credit will kill you people - don't buy into the marketing. Live within your means.

I have very little sympathy for the over-spenders.

Joely · #3 (**permalink**) 05-30-2005, 07:10 PM

Mikeg,

People have made out like bandits the past 25 years by buying above their means as this gave them more leverage when they sold the property to others.

The guys who got caught were the ones who got laid off or something like that.

Joel

WE ALL BE SPECULATORS ..... we love something fer nothin'

vincent59 · #4 (**permalink**) 05-30-2005, 07:54 PM

Glad to see the post had all the facts right.Thayer st moves from the heart of n.philly up to the Northeast, Then Abington turns into a lower middle class town. Better tell all those folks in Rydal and Jenkintown that they paid way to much for their houses. I wonder how accurate the rest of the story is?