Three months after Ronda Wilkerson’s home was foreclosed, she finally found a place she could once again call her own.
Wilkerson lost her home of nearly 20 years in August, and since that time had been spending two-week stints with various friends and family members. But as of early November, Wilkerson was living with her daughter and son-in-law, and she’s starting to settle in.
Wilkerson had been worried about being a burden to the couple, but she has own apartment-like space in the basement, that gives her and her daughter’s family the opportunity for privacy and togetherness.
"It’s a blessing from God, it really is. I actually have a three big-room basement apartment with my own bathroom, kitchen and even my own porch. I got put to my old swing back up on porch, and I get to swing my granddaughter every night," she said.
"Out of the tragedy, a whole new world opened up for me. Sometimes we don’t know why God does things, he just does them. I always wanted to be close to my daughter and now I physically see her two or three time a week. It’s nice to have my own space again that I can call home, and I’m looking forward to the holidays."
The Cycle of Foreclosure
Wilkerson eventually weathered the foreclosure storm, but Sherry McGahee is still struggling through the wreckage. McGahee’s dream home in Oxford was sold out from under her at the Nov. 3 courthouse auction.
"We had to leave almost everything behind, because we didn’t have time. We ended up not being able to get a truck, and my daughter lost 90 percent of what she used to own. Some of the people who came to help move things were scavenging through our possessions," she said.
McGahee ended up walking away from everything. Her home’s mortgage company never did talk to her after the death of her common-law husband in April, and she gave up trying to plead with the court because she was tired of fighting a losing battle.
"I just can’t believe it went so fast. There was nothing I could do to stop it," she said. "It was really hard for me to do, to walk away. All my stuff that I had collected over the years.
"My home, my family, my memories. I ended up walking away from it all. I walked away from my whole life."
McGahee is staying with family members in another county until she figures out what to do. She expects she’ll bounce around until she can get on her feet. She hopes to somehow have the surgeries she’s needed to fix her knees and help her walk well again. And she hopes to take the time to heal from her long mental breakdown after dealing with death and foreclosure.
Despite all that, she’s thankful for what she has.
"I know that people are in a lot worse shape than I am. I’m thankful for what I have, for family and friends," she said. "It can all change so quickly. Many people are just one paycheck away from disaster."
The Story of Sales
Every month, dozens of Newton County residents continue to lose their homes to foreclosure. Numbers are down slightly from earlier this year, but on average more than 80 homes are still foreclosed per month. As of Dec. 10, more than 1,013 homes have been foreclosed, many owned and many vacant. In addition 589 vacant lots have also been foreclosed, according to the Newton County Tax Assessor’s Office.
However, the more encouraging trend is that home sales numbers are rebounding. In 2008, Newton County had 1,464 total foreclosures, homes and vacant lots, but only 250 properties were sold back into the market.
In 2009, there have been 1,611 total foreclosures, but more than 1,100 have been sold back, County Tax Assessor Tommy Knight said.
Banks aren’t holding onto properties as long, and that high number of sales shows there is a market for both investors and homeowners.
According to the National Association of Realtors, home sales increased by a substantial 10.1 percent in October. More than 6.1 million units sold in that month, the highest number in 2.5 years. The association speculated that many buyers were trying to finalize a deal before the first-time homebuyer tax credit ended on Nov. 30.
The up-to-$8,000 tax credit has since been extended to April 30, which the NAR said should provide more time to homebuyers who didn’t meet the original deadline.
Tom Bailey, owner of Prudential Realty Colony, said the tax credit hasn’t affected the local market much. He said the most of the people who get the tax credit would have purchased a house anyway. Not everyone gets the full $8,000, and it is a tax credit, not free money up front.
However, it has helped pushed some people to buy a house sooner, and it has helped people buy slightly larger houses than they otherwise might have.
Living in the Home You Buy
Bailey said regardless of the effect of the tax credit, the local market is correcting itself. He doesn’t have exact numbers, but he said more live-in homebuyers are starting to purchase foreclosures and second sales, a term for the second sale after a foreclosure. The market earlier this year and in 2008 was dominated by investors, but that trend is changing. He said it’s becoming harder and harder for investors to find those true gems of a deal.
"Many of the buyers are actually homebuyers who were priced out of the market before. They’ve reentered now, both first and second-time homebuyers. Particularly in the lower-end market, homes around $100,000 and below," Bailey said.
Upper-end houses, particularly those closer to $300,000 to $400,000, are moving slower, but there is movement. He said banks and the Federal Deposit Insurance Corporation are starting to sell properties more quickly and in this higher range.
However, the market won’t be able to correct itself overnight, especially as people continue to lose jobs.
"We can’t push it to correct itself. Until people stop losing jobs and can afford to make house payments it won’t be fully right," he said. "It’s not just that everyone was in an upside down loan, but when one or both members lose jobs they simply can’t afford houses.
"Investors and owner-occupied buyers are helping clear the market, but job losses continue to put more on the market."
Newton County’s unemployment percentage continues to outpace state and national averages, sitting above 12 percent. However, since reaching a high of 12.9 percent in July, the numbers have improved recently, and the percentage dropped to 12.4 in October.
Both Wilkerson and McGahee said they are still unemployed and having a hard time finding work. Wilkerson said she hasn’t yet been able to get an interview.
Although investors generally get a bad rap, Bailey said there has been a lot of benefit from investors buying houses and renting them out in this market.
"If we didn’t have investors buying houses for people to move back into those people would be homeless," he said.
Bailey said his business has increased by around 15 percent since last year, and he’s optimistic about the market’s future.
Credit Scores and Interest Rates
Lee Waldo, owner of the mortgage lender Element Funding in Conyers, said his company has seen a steady uptick in business. Element originated $43 million in mortgages in October, not as high as he had hoped, but still an increase over previous months. November continued the trend coming in at $45 million.
Waldo said that increase comes even as lending guidelines continue to tighten, following the free-money years of earlier this decade. The minimum credit score for loans is around 620, but many lenders are moving up to scores of 640. Prior to the collapse, 580 was the historic floor.
Waldo said most of his business is from first-time homebuyers. Wilkerson had to move in with her daughter, but many college-aged kids are finding they have to move back in with their parents. And that’s a trend many don’t like.
"I’ve heard of a lot college students moving back in with mom and dad, so when they have a chance to move out they’re buying their own house," Waldo said.
He said for any prospective homebuyers who are on the fence, now may be the time to buy a house.
In an effort to prop up struggling banks, lenders and the housing market, the federal government has been purchasing many of lenders’ mortgage backed securities, those bundles of mortgages that lenders sell to investors.
However, the government is preparing to step out of that role next spring when several federal programs expire.
When that happens, the private investors will once again be the ones who will be buying the MBSs, and they will want to see higher interest rates to make buying those bundles lucrative investments.
"The Federal Reserve has artificially held interests rates down (by providing a guaranteed market for MBSs), so by spring those mortgage interest rates will go up," Waldo said.
As for new homes, they’re still not being built. Newton County had seven new residential permits in October and three in November. Those numbers aren’t expected to rebound for a few years.
