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The Foreclosure Effect
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As foreclosures in Newton County continue to climb to all-time highs, the affects of them - disappointed dreams of homeownership, declining property values and hundreds of vacant homes - are spreading around the county.

As of the end of June, there have been 606 foreclosures in the county this year, according to the Newton County Superior Court Clerk's Office, a figure that with six months left to go in the year is well on track to overtake 2007's foreclosure record of 758.

Foreclosures in the county, as in Georgia and across the nation, have been steadily rising as the result of a surge in subprime mortgages, homeowners taking out loans they can't afford and careless lending practices.

In the second quarter of 2008, Georgia had the eighth highest rate of foreclosures in the country, one for every 140 households, according to RealtyTrac, which tracks foreclosures.

Opinions vary as to who bears the most responsibility for the foreclosure crisis - the lenders who pushed the homeowners into a loan they knew they couldn't afford or the homeowners who were financially irresponsible by taking out the expensive loan in the first place.

According to a report by federal mortgage company Fannie Mae, over the seven year period from 2000-2006, Georgia had the nation's highest rate of mortgage fraud, followed by Ohio and Indiana. Mortgage fraud filings for the state peaked in 2002 and have been steadily declining since.

Last Tuesday, during the county's monthly foreclosure auction on the Newton County Judicial Center's steps, a small crowd of people gathered in the 90 degree heat to listen as approximately 160 foreclosed properties were auctioned off.

Errol Nichols, a lawyer from Conyers, was auctioning off properties for several area banks, though there were no bidders. All properties that did not have outside bids went back to the lender. Nichols, who has been doing auctions in the county for 20 years, said not many people are buying foreclosed homes these days, despite rock bottom prices.

"It really seems that they shouldn't have even been loaning them money," said Nichols of the lending banks.

According to RealtyTrac, there are currently 584 bank-owned properties in Newton County.

Georgia's non-judicial foreclosure practice, which does not require banks to come before a judge before foreclosing on a property, has resulted in one of the fastest foreclosure processes in the nation. This has also contributed to the state's high foreclosure rate.

Mike Kimble, an independent painting contractor, attended the auction to see what would happen to his own foreclosed home. Kimble, who moved to the county three years ago to take advantage of the housing boom, said the implosion of the housing market, coupled with being continually underbid for contracting jobs by immigrant labor left him unable to pay his mortgage.

Kimble, a tan man with bleached blond hair partially concealed by a straw hat said he probably shouldn't have taken out the $260,000 mortgage on the three-bedroom home on four acres he lived in by himself Oxford. At the time he took out the mortgage, Kimble said he believed he would have no problem paying it off in $2,000 monthly installments.

"I bit off more than I could chew coming here. I have to admit that," he said.

By the time the home was foreclosed on, Kimble estimated that he had put 10 percent equity into the home. Kimble said he tried to save it by filing for Chapter 13 bankruptcy but was unsuccessful because of the way the bankruptcy laws are structured in Georgia.

Kimble said he planned on moving into an apartment by week's end, but he hadn't given up hope of owning a home again in the future.

With so many foreclosures in the county (3.2 for every 100 owner-occupied houses), some neighborhoods are hit worse than others.

In the Heatherstone subdivision, a quiet community of about 24 homes located off of Ga. Highway 36, there are at least three houses residents believe are sliding into foreclosure and three others that are for sale.

Jason Smith, who is trying to sell his own home, said the house next door to him has been vacant for six months though nobody from the bank has been by yet.

As no one else has been taking care of the property, Smith said he and another neighbor have taken it upon themselves to mow the lawn rather than let the property appear rundown.

"These people are just leaving these houses," Smith said. "They know that they can't sell them. My neighbor got a job opportunity in Tennessee and she just left [the house] and let it go into foreclosure. People have these houses that we're stuck with taking care of them or letting them grow up."

One of the vacant homes has recently been occupied by a family Smith said he believes is squatting. The former owner of the property is believed to know the family and have given them permission to live in the house until the bank forecloses on it he said, adding that the water was shut off at the house at one point.

The man and woman who live in the house, along with several children, declined to be interviewed.

Smith said the family is not taking care of the house while they live in it. On Friday the lawn showed signs of not being mown for some time, several children's toys were spread out on the grass. A bowl brimming with cigarette butts rested on a card table surrounded by folding chairs in front of the house. The front door was covered with the smudges left behind by many children's dirty hands.

"People who are living there, squatting until the bank kicks them out, they don't take care of their place," Smith said. "No one's taking care of these properties. The banks aren't keeping them up. It makes the whole neighborhood look bad."

According to a 2006 study authored by Georgia Institute of Technology Professor Dan Immergluck, a 1 percent increase in the foreclosure rate of a neighborhood is expected to increase the number of violent crimes by 2.33 percent.

Tommy Knight, chief appraiser for the Newton County Tax Commissioner's Office, said he believes some 80 percent of the county's foreclosures are due to adjustable rate mortgages, a mortgage loan where the interest rate is periodically adjusted (usually higher).

"Probably the lending institutions were putting people in homes that maybe couldn't afford that type of home," Knight said. "That's a lending issue."

Knight said he tracks neighborhoods one at a time for foreclosure rates to determine if they are having an affect on property values.

"You can't make a blanket statement to say that foreclosures are affecting all areas in Newton County. That is not true," he said.

While an expanding tax digest with double digit growth for the last several years has shielded the county government's revenue stream from the hurt felt by declining property values in neighborhoods hit hard by foreclosure, it seems that the foreclosure rate has finally caught up with the county.

Knight said the tax digest he submitted a month ago was up by 4 percent from last year, thanks in large part to the opening of a Home Depot and a Super Wal-Mart. Had it not been for those stores, there would have been little growth he said.

"I honestly believe that at this point, our overall digest will probably go down into 2009 versus what it is in 2008," Knight said. "I do see a downward trend in the real estate market pretty much countywide. I think it's going to vary area to area."

For homeowners who may receive property tax bills a little lower this year than in years past, Knight said they shouldn't feel too pleased.

"None of us wants to pay taxes," Knight said. "But in the real world you always want your home and the value of your home to appreciate."