Ronda Wilkerson doesn’t live on the street, but she is homeless. She’s lived in five houses over the past couple of months, wandering from friend to family member and back. She never stays anywhere more than a couple of weeks for fear of being a burden.

Wilkerson’s home of 19 years was foreclosed in August. Her most valued possessions were scattered across Newton County and beyond, but more importantly, her dream and her pride were taken away.

“You feel very alone and you wonder if you’re ever going to really get back on your feet,” she said. “I guess my gratitude to others has helped to take a lot of pain away, but you just feel worthless and that’s not an easy thing for me.

“You listen to the news reports, and you hear in different commitments that the powers that be are going to do things that are supposed to help people. And you sit there and say ‘How did I get here, if I live in such a generous world?’ The bottom line is that I lost my piece of America. It will hurt for a long time, but I can guarantee that I will not let it defeat me.”

Wilkerson wipes away the tears and rises to her feet. She’s going to eat some lunch, and later she’s going to continue her job search. Tomorrow she’ll do both again.

... One Step Back
Wilkerson did everything she could to save her home. She called the mortgage company. She called the company’s attorney. She mailed in a packet of her financial information. The mortgage company said they didn’t receive it. She faxed it over. She called them again. It didn’t matter.

“They asked me to stop calling… when they received my fax, they said give us three to four weeks,” Wilkerson said. “I got a phone call that the investor that owned the home refused to allow me to stay. They said they would rather foreclose than allow me to pay $800 a month … I told them I didn’t have anywhere to go.”

As of Oct. 1, nearly 1,200 foreclosures have occurred in Newton County in 2009. However, the recent numbers seem to be improving, as monthly foreclosures were in the 80s earlier this year, but reached a low of 48 in September, according to Georgia Multiple Listing Service.

However, the flipside is that a second wave of foreclosures has arrived. Many of the 2008 foreclosures were new homes owned by people who had overbought or had been unable to pay skyrocketing interest rates. As the economy continues to stutter in 2009, more people are losing long-time homes because they’ve no longer earning a paycheck.

“Now the stable people are starting to go under. The good, honest citizens who have always worked hard,” homebuilder Steve Dubois said.

Can Anybody Hear Me?
Sherry McGahee isn’t your average foreclosure victim. She didn’t buy a house she couldn’t afford, and neither she nor her common law husband lost their job. But tragedy did strike in April of this year when her husband died unexpectedly. She was unemployed, because she was finally preparing to deal with deteriorating health. In the blink of an eye, her future was gone.

The foreclosure crisis hurt her in two ways. First, she still has a home in Snellville, which she hasn’t been able to sell despite lowering the price by more than $60,000. Without that money, she isn’t able to make her current payments, and because her mortgage has been sold so many times, she’s hasn’t been able to even discuss options with American Mortgage Network. Her name is not on the mortgage, and common law marriages are not recognized in Georgia if they began after 1997. Her name is on the deed, but she still hasn’t been able to make any headway.

“I can’t do anything,” she finally says, exhausted. Everywhere she turns doors are being closed.

McGahee felt she had found her dream home. She and her husband envisioned spending the rest of their lives in this beautiful house in Oxford countryside, where deer and rabbits would daily cross the yard.

Now, she’s been told she has to leave as the mortgage company prepares to sell her house on the courthouse steps at the Nov. 3 auction. She has trouble packing because of her health, and she doesn’t have anywhere to store her possession anyway. She’s working with Repairers of the Breach, a local non-profit, to see if she can find a place to stay, but, regardless, she plans on giving most of her things to Repairers. She may move in with friends or family, or she may move into a woman’s shelter.

Her story isn’t commonplace, but her difficulty in working with the mortgage company is. Although the Obama administration has puts tens of billion into programs to help keep Americans out of foreclosure, local attorney Frank Turner Jr. said he hasn’t heard of many mortgage modifications locally. Many lenders are unable to understand and put into effect the complicated federal programs, and many simply don’t meet its qualifications.

Local realtor Landis Stephens said some of the larger lenders have used the programs, but most struggling Newton County residents aren’t being helped.

The Chicken or the Egg
The local housing explosion may have started out as a reaction to the job growth in Atlanta, but it soon began to react to itself and turned into a cycle where the houses that were built and sold began to attract more developers and builders, who in turn built an ever-increasing number of houses.

When the market collapsed, all of those workers who had flocked to the industry vanished. The big time developers left and jobs were lost all the way down the line. The number of members in the Newton County Home Builders Association dropped from 385 to 125. The number of members in the East Metro Board of Realtors dropped from 1,200 to 450.

The housing boom was one of the main factors that brought the country out of the 2001 recession, and when it stopped so did economic growth. There was nowhere for all of these out of work housing employees to go. Newton County was particularly dependent on housing jobs and is being hit particularly hard, as the unemployment rate climbed to just shy of 13 percent in July.

“Every banker I talk to says this is a true depression for the housing industry,” homebuilder Larry Maynard said. “Historically, the housing industry has always taken America out of a depression. Around 5 percent of GDP (Gross Domestic Product) is housing related, including furniture, insurance, carpet, houses and all other kinds of jobs.”

Buyers' Market
Banks and investors originally held onto foreclosed homes, because they didn’t want to sell them for a loss. However, they eventually decided that selling for a loss was better than nothing. So they dropped the price. And dropped it again. And continued to drop it until someone was finally willing to buy. Some houses lost more than half their value.

In one neighborhood, a $203,000 house sold for $89,000, and in another neighborhood a $161,000 house went for $63,000. Most of the homes experienced considerably smaller declines; nevertheless, the market has been turned on its head. In many cases mortgage payments have fallen below rent payments, and the irony is that many of the homeowners who never should have purchased a house could probably afford one now if their credit wasn’t shot.

“In 2007, you could not even get an offer on a house. Real estate agents said they would give a $10,000 cut in price, or they would even buy the owner a car if (that person) bought a house. It was either pay $15,000 for a KIA or lose $100,000, but you still couldn’t sell it,” Maynard said.

Newton County is still seeing some incredibly low-priced homes, which homebuyers and investors are scooping up. RE/MAX Realtor Charlotte Gibbs said foreclosures in some of the higher-end subdivisions, like Hodges Circle, were listed at such good deals that several buyers would drive back up the price.

“You had these homes that sold for $369,000 now selling for between $190,000 to $230,000. It was a dog fight to get it. Yet, you still had people hesitating and saying, ‘Well, I guess I could make an offer,’” Gibbs said.

While 879 parcels have been sold out of foreclosure, County Chief Appraiser Tommy Knight said the number of regular, or arms-length, sales is also increasing and that’s a positive trend. He said these second sales on properties are bringing the prices back up, not to where there were originally, but to where he thinks they should have been all along. The property that sold for $63,000 out of foreclosure on April 1 was sold for $148,000 just weeks later on April 26. The appraiser’s office had it valued at $145,000.

“Everything got so overstated, but now we’re seeing everything going down. The economy is adjusting to what it should have been,” Knight said.

Despite the improved prices, builders and developers don’t expect to see any significant number of new houses built for at least three to five years, and developers may have to wait longer than that. Chairman Kathy Morgan has numbers that show why: the county has around 5,000 vacant homes and around 7,000 vacant lots. For builders like Bob Goucher that spells further hardship.

No Overnight Recovery

“It depends on jobs and the overall economy. When people get confidence that they will keep their job and pay level, then it will pick up. Homes truly follow jobs,” Goucher said. “But I don’t think we’ll see many new homes built any time in the foreseeable future.”

In order to stay afloat, Goucher, who is nearing retirement, has been doing mostly remodeling work, with the rare custom home project here and there.

On the development side, Hubert White sees the future working out the same way.

“I haven’t seen any of the big guys, like Pulte (Development), coming back to the market. They are trying to speculatively buy lots mostly in North Atlanta, but not here,” White said. “I don’t see people in Newton County being able to make a career or living in developing for a couple of years.”

Goucher said that once the foreclosure mess is behind the county, things will pick up, but many real estate experts think we have at least three to five more years of lower, but steady foreclosure numbers ahead.

Besides the struggling economy, which has shown signs of increased productivity but few job additions, several three, five and seven year adjustable rate mortgages are still working their way through the system. When these interest rates re-set, lenders expect more homes to pop onto the market. Thom Bailey, owner of the local Prudential Colony Realty, said he thinks the housing market is in the middle of a W-shaped future.

“We’ll have up and down spots for about three years. We can’t recover immediately, because we still have a lot of those ARMs out there. We have the five-year ones coming up,” Bailey said.

Local lender Allen Kenknight said problems are starting to crop up on the commercial side of the market, which usually runs about 2.5 to 3 years behind the residential market. That will cause only more problems and lead to more local bank failures, because they were much more involved on the commercial side than they were on the residential mortgage side.

“Do not be surprised if we lose another 100 banks in Georgia before this time next year,” Kenknight said. The state has already lost more than 20 banks in 2009, the highest number in the country, and some projections expect more than 1,000 more bank failures by 2011.

Silver Lining
Jermaine Gonzalez married his high school sweetheart in 2008 and a short while later the couple was expecting a baby. He knew his family needed more space, preferably in a clean, quiet community, so they chose the southwest part of Newton County.

“The most important thing was to establish a place to call home, some place where I can share time with my family,” Gonzalez said. “Now we have that foundation.”

First-time homebuyers and investors, those who still have money, are finding this a great time to get into the housing market. Gonzalez bought his house for $20,000 off the original price and received a new home in a nice neighborhood.

Investors too are purchasing homes to buy, fix up and resell, but they have to conduct more careful searching than during the boom. Every first Tuesday of the month, investors still line the courthouse steps looking for good deals, and out-of-state investors are still banking on a turn around in Atlanta and Newton County, including a firm in Colorado that is actively looking at property in Covington.

Kenknight said there is a twist to people taking advantage of foreclosure sales: the buy and bail. Some people are using their good credit to buy larger, nicer foreclosure homes in addition to their original home. Because of the tough selling market, if the person can’t sell or rent out the original house they simply let it go into foreclosure. It kills their credit, but they don’t care, and now they’re paying less for a bigger house.

Despite all of the foreclosures that dominate the news, local banker Fred Vick said it’s important to remember that most of the tens of thousand of people who moved to Newton County have not lost their home.

“There are always pluses and minuses. Typically you hear the bad stories, not the person who is still in their home and doing well,” Vick said.

Wheat and Chaff
Although the downturn has hurt business, many in the realty and lending fields will tell you there’s a good side.

“We had a lot of top-heavy agents, lenders who had lost that level of service. They started to look like used car salesman,” said Stephens, a realtor with Georgia Realty Specialists. “Buying a house is serious business… a lot of foreclosures could have been prevented if we took the time to make sure buyers were approved.”

Previously mortgage lenders didn’t need a license to operate in Georgia, but that will no longer be the case by March 31, 2010, and governments are enforcing stricter regulations in other fields throughout the industry. In the downturn, veteran lenders like Lee Waldo are finding fewer mortgages, but less competition as well.

Waldo used to work for now-defunct HomeBanc, one of the first companies to be done in by the subprime bust. However, he opened a new lending company, Element Funding, in 2007 and managed to survive through the lowest low, because of his personal relationships to realtors and others.

His business bottomed out in January when his company originated $10 million in loans. But the market is definitely picking up and Waldo projects Element will originate $50 million in loans in October. While 90 percent of his sales earlier this year were foreclosures, today about 50 percent are foreclosures and 50 percent are second sales.

“There was a huge learning curve when foreclosures first happened. Banks froze, the FDIC froze. They eventually learned there was no benefit to holding onto properties for six months, so now things are moving through much more quickly. Investors are coming back out and the tax breaks have helped some first-time homebuyers too,” Waldo said.

The residential appraisal process also got an overhaul, but many believe that’s hurt the market even more. A new law states that banks and mortgage lenders are no longer able to pick a home’s appraiser, to prevent fraud generated by a buddy system. However, many of the appraisers coming to Newton now are from outside the area, and, therefore, don’t know the local market well. They often try to compare disparate houses, because they focus on square footage and don’t take the time to go out and look at the quality of these houses.

“I had appraiser who were taking production houses and comparing them by square footage to turn-of-the-century custom house in historical neighborhoods, that had 10 foot walls, 8 foot doors and gobs of trim,” Goucher said.

If anyone wants a new house in this market, they’ll have to pay more than it’s worth on today’s market.

Reigning It In
During the boom, Newton County was being overrun by sprawl, at least in the opinion of many community and political leaders. They say the housing bust came at a good time, before the entire county ended up like sections of the western end.

“The growth was controlling Newton County, not the other way around,” Chairman Kathy Morgan said. “There was the realization that growth was coming and there was nothing we could do to stop it. We couldn’t fault the landowners who were selling and making a lot of money … but the frustration was that we didn’t implement strong enough ordinances.”

Doug Doster was a small, local developer in the ‘80s and ‘90s, and he focused on smaller subdivisions with inexpensive houses, designed for families ready to buy their first home. He said neighborhoods like Heritage Garden and Dove Point are representative of the past desire for simple homes. Doster was in the business to make money, yes, but also to help people, not to make huge profits. Even though they weren’t required at the time, he said he put in curbing and gutters and other niceties.

But as the boom came, many of the larger developers came to the county to make money, plain and simple. They built the cheapest homes allowed, the ones made of vinyl siding, with little insulation and no landscaping. Their subdivsions had brittle streets, no sidewalks and no gutters. Gibbs said residents tell horror stories of vandals being able to cut through housing with simple knives and rain runoff flooding downhill homes.

Former District 2 Commissioner Ronnie Dimsdale said the board tried to react by updating regulations. They increased road quality, required sidewalks and forced developers to implement stormwater controls. But developers would continually find loopholes, and the Board of Commissioners would end up rewriting the plans again.
Morgan ran for county chairman to address the blight and prepare the county to deal with the inevitable growth down the road.

She said the current BOC is examining the development regulations in depth, and they are willing to implement more stringent changes, like requiring a certain quality of vinyl siding and forcing developers to build amenities before the houses. She wants to avoid the problems that plague many of the more recent neighborhoods, like the lack of quality homeowners associations.

“My frustration is that the growth on the western end of the county is not lasting. My term will be spent dealing with those areas. It hurts me personally to see blight in this beautiful county,” Morgan said. “We want good, quality houses, but we don’t want to prohibit growth.”

400,000 or Bust
Kay Lee runs the non-profit Center for Facilitating Community Preservation and Planning, a community resource that helps county leaders look toward the future. She said the Leadership Collaborative, a grouping of political leaders from across the county, has spent the past four years carefully crafting plans to direct that future growth.

The 2050 Build-Out Plan and the Future Land Use Map, which are still being developed before their final release, focus on concentrating residential and commercial growth in a few “development nodes”, mainly in the western end and heart of the county. The county hopes to preserve the south and south-east regions, which house much of the county’s farms and its major rivers and water supplies. Water is already proving to be the most crucial resource in Georgia, and future battles between states and counties are looming around the corner.

Based on numerous studies by experts from around the state, local officials believe Newton County can sustainably hold 400,000 people. Those people would be concentrated in the five existing municipalities, and in the Almon, Salem and Oak Hill communities in the west and the Hub Junction community in the east. Lee has a simple summary for what she and those leaders would like to see.

“If I’m flying up at 30,000 ft. and I look down, I would see five Covingtons. Five communities with schools, businesses, art galleries, bike paths, everything,” Lee said. “We’ve learned that our previous growth patterns weren’t sustainable.”

Turner Jr., who is also a Smart Growth Newton County member, said much of the younger generation is moving towards this type of concentrated, sustainable living. These individuals don’t want private yards that have to be mowed, but rather private parks and amenities.

“When people think of density, sometimes they think of downtown Atlanta, but density can be like downtown Covington, with homes close to commercial. Compare that to the west side. Instead of driving four miles to the store, you drive four tenths of a mile or you walk or ride a bike,” Turner said.

Traditional Neighborhood Developments, or TNDs, is a buzzword that refers to combined residential-commercial communities, like Clark’s Grove. Experts more of these mini-communities to become more frequent as part of the density movement.

Turner said the keys are to protect natural resources and to save money by concentrating utilities and services. The previous explosive growth put huge burdens on the county, especially in the areas of education and public safety.

Jobs and Taxes
For the 1995-96 school years the Newton County School System’s budget was $40,489,000, but by the 2008-09 school year the budget had quadrupled to $161,977,380. Superintendent Dr. Steve Whatley said the school system had to compete with developers for land for schools in the western part in the county, and with those new schools came 1,700 additional employees and increased demand for special programs, like special education and gifted classes.

During the 15 years from 1994 to 2008, 14 schools were built, but in the preceding 50 years, only 10 were constructed.

As far as county government, Newton County’s budget increased from $13.66 million in fiscal year 1995 to $44.66 million by FY2009. Utility costs have increased, but the large surge in crime has forced a much larger investment in public safety.

The huge residential growth has thrown off the tax balance, because residential properties usually cost more in services that they pay in taxes. On the flipside, businesses and industries provide more dollars in property, ad valorem and sales taxes than they demand for services. Turner, Morgan and others agree that none of the county’s planning will be possible if the county can’t attract businesses and job growth.

Former Chamber of Commerce President Kevin Price said he believes the lack of business growth was due to a combination of factors: Newton’s residents didn’t have high enough income to draw retail; the county didn’t aggressively pursue industrial and commercial growth; a lack of existing development and the cost of impact fees made other communities a better choice; and the inability to sell mixed drinks blocked out nicer establishments.

An increased focus on economic development has been emphasized by leaders in the county and by those in every city, but that’s the case in almost every county in Georgia. Local leaders hope the county’s resources, like Georgia Perimeter and Oxford colleges, the Covington Municipal Airport, the downtown square and the county’s rivers and recreational facilities will give them a competitive advantage.

The 1,500-acre Stanton Springs industrial park has long been hailed as the next great business center, but three years after its development, it remains vacant. Rumors have again popped up saying Stanton Springs is a finalist to land a big industry; everyone hopes that this time those rumors will turn into a deal.

Culture Shock
Rob Fowler is a fourth-generation resident of Covington, and for many years the Fowlers have been one of the most prominent families in the county, because of their large land holdings and ownership of the city’s largest bank. When Fowler speaks about the future of the county and how it’s changed, you can still hear the hope, but also a trace of sadness in his voice. He’s disheartened by the rise in crime, the political bickering and the fact that all of the advances seemed to be countered by setbacks.

“I feel like we’ve tried to grow the right way. I’ve been involved for 40 to 50 years, and we’ve come about as far as thought we could come. There are areas that can still improve like downtown and Georgia Perimeter College, which is a credit to this community. But every time we do something positive, we have so much housing coming in that it seems like we’re just staying even,” Fowler said. “I think it’s time for me to get off certain boards. I may look at the past more than the future, and I may regret that the future doesn’t look like I hoped it to.”

It’s a different world from the one Fowler grew up in, and Morgan said she’s noticed a lot of differences herself, both positive and negative. She said many of newer citizens are much more vocal and call to ask what the county is doing, which she said is a good thing, because they hold the government accountable. But it’s a double-edged sword, and sometimes residents think that the government has more power than it does, because they’ve come from larger cities with more money and more services.

She said a growing county has caused some separation, because there is no connection between Covington and the residents who commute to Atlanta. Their focus is to the west, and that’s why the county is trying to put more resources out there, like Denny Dobbs Park and the soon-to-be-constructed Porter Memorial Branch Library. That’s why developing communities out there to keep residents involved in Newton County is so important.

“There is a culture moving out there. You have teachers, doctors, lawyers and business leaders. We need to get them involved in this community, we need them to become leaders,” she said.

In addition to refocusing their attention, Morgan said the county will have to find a way to blend the younger groups in the west with the older stalwarts in Covington and the east. Morgan and Covington Councilwoman Hawnethia Williams said the people are naturally hesitant to reach out to strangers.

“When change comes we tend to say is this going to infringe on me, and sometime we worry about our identify being replaced. We’re used to that southern way and sometimes that comes with a little bit of an attitude. They want to have their input, but their input is not based on the background of Newton County and Covington,” said Williams, who is a lifelong Covington resident.

“If done properly, we can bring the groups together and have that diversity and input, but still have the traditional, southern flavor and maintain some of the way we’re used to doing things, because that’s part of history. We don’t want to overshadow that, but we can add to flavor and that becomes a really beautiful thing, because then we have the richness of tradition, and the diversity.”

Although he talks about stepping out of the scene, Fowler remains very active in the community, and he said he has no plans to leave.

“Newton County is still my home and no matter where I travel, it’s always a great place to come back to.”