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Housing Crisis Knocks Loudly in Michigan
For most of the past year, Michigan has ranked among the three states with the highest percentage of late mortgage payments and foreclosures, surveys by the Mortgage Bankers Association show. In the fourth quarter, it came in third, behind Ohio and Indiana, with 2.39 percent of its loans in foreclosure.
Many economists say, and union officers agree, that those hardest hit are not auto workers who lost jobs. Many received buyouts that should keep them afloat for a while. And because they tend to be older, some have paid off their mortgages.
  "The problem is moving out to the suburbs," says Ralph Newkirk, an agent with the Michigan brokerage Real Estate One. "It's spreading like a cancer." (By Dina Elboghdady -- The Washington Post) |
Those feeling the worst squeeze, rather, are workers at the auto supply companies, such as Max, 44, an engineer who spoke on condition that his last name not be used because he is embarrassed by his situation.
Max bought a condominium in the Detroit suburb of Plymouth using a traditional fixed-rate mortgage more than five years ago. But three years later, his firm took away company cars from its workers, hiked insurance premiums and cut raises and bonuses -- raising Max's monthly living expenses and reducing his pay.
Max responded by refinancing his condo twice. Though he did not realize it then, the second loan was adjustable. Over time, his monthly payments rose from $1,500 to $1,800 to $1,950.
"I wasn't even reading the paperwork," said Max, who makes $106,000 a year.
Weeks ago, Max turned in his keys to his lender. The bank paid him $500 and took possession of the condo earlier than it otherwise could under Michigan law.
In fact, across the country, official foreclosure numbers do not capture the full scope of the mortgage problem, since many people are doing what Max did. Others are signing over their deeds to the bank in lieu of foreclosure to lessen the damage to their credit records. Some have been granted permission from their lenders to sell the property for less than they owe on the loan.
Signs of Trouble
As the problems grow, at least one type of business is booming in Michigan -- those that help manage foreclosed property. Take the case of Property Maintenance Inc., which changes keys, mows lawns, shovels snow and repairs foreclosed-upon homes in Michigan so that they are ready for sale.
Deanna Simmons, who created the company in 2002, said the revenue of her six-employee firm shot up from $20,000 in the first year to $1.6 million last year.
Driving through the streets of a working-class neighborhood in Dearborn Heights, Simmons points out the tell-tale signs of a foreclosed house: mail boxes overflowing, fliers piling up, shades drawn.
Once inside, she can tell which people left angry. They're the ones who leave all the water faucets running or take the door knobs with them. "They do anything they can to make it difficult for the mortgage companies, like they're trying to get back at them," she said.
Simmons spots the home next door to Laitis, the Dearborn Heights resident alarmed by the foreclosures on her street. The white ranch house is not for sale yet, but the tell-tale signs are there.
Laitis said her neighbors, a couple in their 40s, left recently after they learned their house would be foreclosed upon. The husband, a carpenter, had lost his job. The wife did not work. They crammed what they could into their white Bonneville and drove off without saying goodbye.
Laitis said the house was paid for at some point but the couple took out a $75,000 home equity line of credit to buy a car and build a garage, now half-finished.
Lots of people can't afford their mortgage or can't afford rising property taxes, Laitis said. For her, the taxes have become onerous. She wondered aloud if she could lose her house for failure to pay them. She could.
"Maybe I'm going to be the next one out of here," she said.
