More area homeowners at risk as foreclosure proceedings double
Uncle Sam is bailing out Wall Street wheeler-dealers who invested in home loans, but there’s no relief in sight for the homeowners on Main Street.
On Southeast Main east of 144th Avenue, stretching from outer Southeast Portland into Gresham, 14 homeowners have been hit with foreclosure filings in the past year, plus scores more in nearby blocks.
• Judy Myer pawned her wedding ring and stopped taking prescribed medicines in a futile bid to save her Southeast Main Street home of 18 years, after husband Mark Myer lost his job and his unemployment benefits expired.
• Judy’s son, Steve, who lives down the street, got socked with foreclosure after his 7-year-old daughter required heart surgery. Steve took out a second mortgage to cover the medical bills, then fell behind on house payments after suffering an on-the-job injury.
• Across the street from the Myers, Ron Zitzewitz just got a six-month notice to vacate his mother’s home – one month after she died. Zitzewitz, 51, isn’t old enough to assume his mother’s reversible mortgage, and can’t refinance the loan because he’s permanently disabled.
Portland is no real-estate basket case like Las Vegas or Phoenix. But the national foreclosure crisis that initially spared Portland has arrived here in a big way, bringing more human suffering and dampening housing prices.
Oregon’s presumed next attorney general, John Kroger, along with state lawmakers and community leaders, will host a town hall for people facing foreclosure or who think they were victimized by deceptive lending practices.
The event, called There’s No Place Like Home, takes place 9 a.m. to 2 p.m. Saturday, Nov. 22, at Portland Community College’s Cascade campus, Moriarty Auditorium, at the corner of North Killingsworth Street and North Albina Avenue.
The number of Multnomah County residents in jeopardy of losing their homes has nearly doubled in the last year, based on the number immersed in foreclosure proceedings. Over the spring and summer, 300 Multnomah County homeowners a month got slapped with foreclosure notices – topping the peak levels reached in the last recession of 2001-02.
In August 2007, the Portland area had an enviable 332nd-highest foreclosure rating among the nation’s 383 metropolitan areas. But by August 2008, Portland jumped to 254th-highest, according to First American CoreLogic, which provides real estate data services.
“There’s a shakeout right now, and we’re failing on all cylinders,” said Portland real estate economist Jerry Johnson.
Portland took longer than most cities to emerge from the last recession and didn’t get as overbuilt as other markets, Johnson said.
But Portland home prices kept rising during the last recession, he noted. If banks and besieged homeowners try to dump too many discounted properties, he said, “you could swamp the market and kill the guys who are OK.”
Home prices are sliding in large swaths of the metro area, especially in overbuilt sectors such as Portland’s condo market and suburban Happy Valley. In early October, in the 97086 ZIP code that includes Happy Valley, there were 247 homeowners facing foreclosure on top of 95 homes seized by banks, according to VisionCore, a division of First American CoreLogic.
Short sales drive down prices
Many overburdened homeowners, anxious to avoid foreclosures that soil their credit ratings, are resorting to “short sales,” in which they sell quickly for less than their home loan if the lender agrees to accept the lower amount. Banks also are auctioning off seized homes to investors looking for sweet deals.
Dumping all those distressed properties on the market, sometimes at fire-sale prices, is depressing home values for neighboring residences.
In a half-block stretch of Liebe Street southeast of Holgate Boulevard and 118th Avenue, four homes went into foreclosure in recent months. Investor Mark Bordcosh snapped up one of them, a three-bedroom townhouse appraised at $217,000, and offered it in an auction, with a minimum bid of $137,500.
“I’m basically getting the house at a discount and I’m selling it at a discount,” he said.
All parts of the city are seeing some foreclosures, though they are less common on the west side and close-in east-side neighborhoods, according to VisionCore. Portland working-class neighborhoods, especially in North Portland and the outer east side, are getting more than their share, as residents lose jobs or get burned by escalating interest rates on subprime loans.
Main Street doesn’t necessarily have the highest proportion of foreclosures. But it is representative of the outer east side – meaning it is seeing plenty of angst and misery.
Adversity is magnified
Southeast Main east of 144th Avenue, dotted with modest one-story homes and towering firs, has long been known as an affordable place to buy a home. But it’s no longer affordable to many longtime residents.
Mark Myer, 57, who lost his computer tech job after his company was sold, doesn’t expect any of the $700 billion Wall Street bailout approved by Congress Oct. 3 will trickle down to his end of the food chain.
“The people that are stomping on the individuals are the ones that got bailed out,” Myer said. “If they share and start helping out some people, fine. History shows they’ll just turn around and stomp on us again.”
Myer landed part-time work, but said employers have been reluctant to hire him now that there’s a foreclosure on his record. That’s despite 22 years’ service in the Navy.
Judy Myer stopped taking medicines a year ago for her anxiety attacks, high blood pressure and cholesterol. After two heart attacks, two back surgeries and anxiety problems, she’s not in good shape to work outside the home.
“I don’t know what’s going to happen. It’s just scary,” she said. “We’ll never be able to go out and have dinner and a movie.”
Her son, Steve, an automotive technician, was denied workers’ compensation benefits after his 2006 on-the-job injury. The injury was deemed connected to a pre-existing condition. He qualified for short-term disability payments, but that only covered 60 percent of his salary. It wasn’t enough to make full mortgage payments and pay his $10,000 hospital bill.
When his home lender demanded full payments on his mortgage, Steve threw up his hands. “I pretty much said, ‘Come and get it, there’s nothing I can do.’ ” he said.
The lender backed down and offered him a payment plan, Steve said. He was able to save the house for now, but said he’s still tapped financially.
A few doors down from the Myers, Trinidad Monje’s former Main Street home sits vacant, months after going into foreclosure. Judy Myer said it’s been languishing on the market at least two years.
Down Main Street near 148th Avenue, Maxsim “Max” Lysack said he was forced into foreclosure after his roommate died. He wound up doing a short sale – selling the home for less than his mortgage – in a deal worked out with the lender.
“I buy it for $285,000, and I sell it for $250,000,” Lysack said.
Ron Zitzewitz has lived on Main Street off and on since childhood. He doesn’t earn much from disability payments and income from a knife-sharpening business, and moved in with his mother.
Under her reverse mortgage, the lender takes a greater stake in the home’s equity each month, in lieu of mortgage payments. Zitzewitz can’t qualify for a new loan to refinance the $160,000 his mother owed.
The house should be worth about $225,000, he said. But Zitzewitz doubts he can sell it for anything close to that because the market is so sour.
Zitzewitz got married a few months ago, but so far his wife has been unable to find work.
“We’re going to have to find somewhere else to live.”