Foreclosures dropped in 2013, but Michigan still one of the worst states
Brian O’Connor, Detroit News
The number of Michigan families who lost their homes in foreclosures dropped to fewer than 45,000 during 2013, a decline of 43 percent from 2012 and down 57 percent from 2011, according to data released Thursday.
Foreclosure-listing service RealtyTrac of California said foreclosures were down 26 percent nationally last year, and down 53 percent from the peak of 2.9 million foreclosed properties in 2010. Overall, U.S. foreclosures were at the lowest total since the 1.3 million defaults recorded in 2007, at the beginning of the mortgage crisis and the Great Recession.
“It’s the overall economy that contributed to the fact that not that many people are going into foreclosure,” said Darralyn Bowers, a broker who sells foreclosures through Bowers Realty & Investment in Southfield, and treasurer of the RealComp II Ltd. multiple listing service in Farmington Hills.
The decline in foreclosures means the number of low-priced homes for sale throughout the state and in Metro Detroit also has dwindled. The resulting lack of cheaper homes for sale has pushed home values up an average of 39 percent as of December. The higher property values means more homeowners can refinance, work out a deal or simply sell their homes if they get into financial trouble, rather than losing the property to the lender.
“A sale is a viable means of liquidating your interest in a piece of property, and if that’s available it’s more favorable than ruining your credit,” Bowers said.
Michigan was one of the top five states to see a decline in home loans entering default, and the start of the foreclosure process, which takes a minimum of nine months in the state, with a 42 percent decrease in new defaults compared with 2012. Michigan also ranked near the top of states with the biggest drop in homes being seized by lenders at the foreclosure process, with a decline of 47 percent.
Even with all that improvement, Michigan remains a Top 10 state for both new loan defaults and for homes being lost to the bankers. With more than 29,000 new defaults, the state ranked eighth in the country, and was the sixth worst for homes going back to lenders.
That’s no surprise in a state where the jobless rate is 25 percent worse than the national average, and where many people with jobs are working for less than they made before the recession. But rather than the wave of defaults spurred at the beginning of the downturn by tricky subprime loans made to unqualified buyers, foreclosures now mostly are triggered by individual financial problems, said Steve Dibert, a mortgage and foreclosure expert with MFI-Miami.
“The majority of people who were put into subprime loans have already been foreclosed on,” Dibert said. “Now it’s slowly going back to what it was before the housing crisis, where a family member gets sick and doesn’t have insurance, or there’s some type of individual financial hardship.”