Foreclosure notices tick up as housing market improves

2006 ………… 32,707

2007 ………… 41,312

2008 ………… 60,539

2009 …………. 87,790

2010 …………. 92,533

2011 …………… 82,595

2012 ………….. 72,441

2013 ………….. 41,020

2014 …………. 21,194

Source: Equity Depot, staff research

Why it matters

Foreclosures can hurt home values, which are important even to people who aren’t likely to sell or buy soon. Home values contribute to the so-called “wealth effect” that helps drive the broader economy.

Foreclosure notices in metro Atlanta rose slightly this month, but six years after the burst of the housing bubble, the market is edging slowly back toward normal.

The 13-county region saw 2,522 foreclosure notices in September, up from 2,350 last month, according to a monthly report from Kennesaw-based Equity Depot.

It’s “a little bump from last month, but that was expected given the extra week in the period” the report covers, said Barry Bramlett, president and CEO of Equity Depot. “It’s been consistent for 2014 with no real surges up or down.”

Foreclosure notices this year are the lowest they have been since 2002.

This month’s foreclosure numbers are 30 percent lower than during September last year and 65 percent lower than September of 2012.

But while the housing market is better, not every neighborhood shares equally in the good news, said Dan Immergluck, professor in the City and Regional Planning Program at Georgia Tech.

Closely watched surveys – like the Case-Shiller Index – show home prices rising for more than a year, but they are often averages, Immergluck said.

“In certain ZIP codes on the south side of the city there are not many sales,” he said. “This is a very uneven recovery.”

Foreclosure notices do not always mean the loss of a home. Sometimes, the owner pays what is owed and keeps the home from being sold at auction the next month. A precise count of actual foreclosures is not available, but Equity Depot has estimated that roughly half of properties whose owners get notices end up being sold.

Still, the number of notices is seen as a general barometer of stress in the housing market, as well as in the economy: a signal of trouble that owners are having making their monthly mortgage payments.

The decline in foreclosures has meant less downward pressure on area prices, said Dean Baker, co-director of the Center for Economic and Policy Research.

“When housing was in freefall in 2008 and 2009, foreclosures were really pushing prices down. But home prices now are pretty much back in trend levels.”

Current national foreclosure numbers are still higher than normal, but they are nowhere near the catastrophic levels of a few years ago, Baker said. “At the peak in 2009 and 2010 it was about 1 million foreclosures a year.”

Metro Atlanta’s worst year was 2010 when there were 92,533 foreclosure notices. This year is on track for less than one-quarter of that. For the economy, the impact of foreclosures is no longer huge, he said.

But for those who slogged through the painful process, the impact echoes.

Julie Jester of Gainesville was one month ahead in her mortgage payments when she went into the hospital for cancer surgery in the fall of 2008. When she came out, she called the lender to say she might fall behind.

She was told she could defer two payments, which she did.

Two months later, the threats of foreclosure began, along with what she calls harassment: “They told me they’d come and take all my stuff, lock me out. I said, I need money for medicine. They said, use that money to pay the mortgage.”

The attempt to foreclose led to a struggle, threats, a court case and eventually a short sale in which the lender finally accepted the price as payment of the mortgage.

“You think: How in America is this happening?” she said.“I would love to own another house, but I’m terrified. I won’t do it unless I can own it outright with no mortgage.”

Now, she’s a renter.

Melody Dareing has teetered on the edge for months after being threatened with an April foreclosure on her Bartow County home. She and her husband, Mike, went to court to block the action. The litigation is pending.

Willingness to negotiate is not always two-sided, said Dareing, who bought the house in 1996. “We have been trying to settle and they just ignore it.”

She and her husband both work several part-time jobs while both of them run a catering business. Payments on the $600-a-month mortgage have been slow at times over the past 12 years, she said, but she always caught up on past-due amounts.

According to Dareing, the foreclosure attempts weren’t because of missed payments but were caused by mistakes in bookkeeping – the lender’s, not hers.

Now, she says, the lender won’t accept Dareing’s payments.

“I have tried to pay them and they keep rejecting it because they say the house is in foreclosure. The only way they’d negotiate is if I admit that I owe all this money, which I don’t. When people say, ‘Oh, you just need to pay your mortgage,’ they don’t understand.

“It hurts that people assume that anyone having a mortgage issue is a deadbeat.”

Foreclosures are not always about cash-strapped low-income owners – at least not the stereotypical kind.

The past several years have seen many foreclosures of property bought by small-time investors looking for a big payoff. But if the house is in a depressed area, they can’t cash out – and their pockets may not be deep enough to keep making payments.

“You’ll sell properties that go through foreclosure a couple of times,” said Tech’s Immergluck. “That is going to take a long time to wash out of the system.”

Atlanta started struggling with foreclosures earlier than most places and has dealt with the problem longer as well.

The aggressive push by many companies to provide subprime mortgages meant that many borrowers with limited incomes were unable to make their payments. And that happened several years before the collapse of the housing market in 2007.

In states where home values were climbing rapidly, hard-pressed buyers could just refinance their mortgages. That didn’t work in Atlanta, where price increases were more modest.