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Homeowners in the Ozarks Hold Their Own on Debt

The Foreclosure Rate, and the Number of Underwater Mortgages in the Ozarks is Below the National Average
ubderwater sale sign
Credit: Michael Pereckas/Flikr

Mike Smith here, continuing our Sense of Community Series discussion on homeowner debt in the Ozarks. 

One indicator of homeowner debt is the rate of foreclosures for late loan payments.  Daren Blomquist is vice president of RealtyTrac, based in Irvine California.  RealtyTrac keeps track of and disseminates realty related data, and Blomquist says the foreclosure rate in the Springfield Missouri MSA, the  Metropolitan Statistical Area of Greene, Christian, Dallas, Polk and Webster counties, is 5 times lower that the national average. “It’s a rate based on foreclosure activity as ratio to housing units.  Out of 209 total metro areas, Springfield ranks 188, so it’s very low on the list.”

Which brings us to “Pam”.  Pam’s mind lately has been on a fast approaching foreclosure, but not the house she’s in now, the home she wants to move into.  The one she’s already secured a loan to buy.  “It’s depending on 3 different banks weather we can get all this worked out and work together here”. Pam lives in Springfield and is self employed at a downtown business and owns land in Taney County. She has purchased 4 homes over the last 28 years, and with her good credit and homeowner history was able to secure a loan for a 5th.  In her situation though, tightened regulations for lenders and borrowers have hit close to several homes.  “My financing is good to go and ready, but now I’m in a crazy situation where the people buying my house want to postpone the sale because the people buying their house need to postpone for their financing, which means the house that I want will go through foreclosure, and rather than wait another 7 days to let me to buy it, the bank says it will pretty much foreclose on the place they say.  Still not final, but the other 2 need to have it worked out.  There’s a lot of limbo going on here.” 

Pam says securing her current loan wasn’t as easy as in her past experiences and knows the folks wanting to but her house, and those wanting to buy theirs, are facing new regulations.  “The first 3 or 4 homes I bought, I pretty much made a phone call and had the paperwork ready for me the next day. Never was a question.  I never missed a payment in my life, I have excellent credit.  None of that matters.  I didn’t realize how hard it was going to be to get a loan now.” 

To my knowledge, Arvest Bank is not connected to Pam’s situation, so I asked Arvest’s  regional loan manager Carla Green for  general comment on lessons learned on loans.  “Everything pretty much has to be underwritten to specific guidelines these days. Most changes are Fannie Mae and Freddie Mac changes which require more documentation.  They’ve  had to take back a lot of loans and homes in the last few years, and so they’ve tightened up on regulations.”

Again, RealtyTrac’s Daren Blomquist:  “of course housing debt is normal and you’ll see a lot of housing debt in a healthy housing market, but what we’ve seen in the last few years is homeowners who are underwater, meaning the debt on their homes is more than the property is worth.  In 2012, we saw 12.9 million homeowners nationwide who were underwater, which represents 29% of all mortgages.  Since then though, and we just ran these numbers this month, (9/13) the number is down to 10.7 million underwater mortgages, or 23%. 

Missouri is running even to the new national numbers also with 23% of underwater mortgages, but the Springfield MSA is a little lower at 20%.  For KSMU and the Sense of Community Series, I’m Mike Smith