Retiree Paullette King felt ill.
After years of faithfully paying home mortgages and other bills, they were no longer able to keep up with house payments.
The Johnsons and Ms. King represent another side of the nation s housing crisis.
Residential foreclosures have grabbed the national spotlight. But there is a far larger, less visible, group of homeowners in trouble. They have fallen behind in house payments but haven t yet been dragged into the very-public legal process that could lead to the loss of their houses.
While the rate of foreclosures held steady in April from a year earlier in metro Toledo, the number of home owners at least 90 days behind in mortgage payments continued to grow, according to a report released last week by First American CoreLogic.
The research firm said 4.9 percent of mortgages were delinquent by 90 days or more, meaning the homeowner missed at least three monthly payments. That was up from 4.6 percent in April, 2008, but is significantly lower than the 5 percent rate for Ohio overall. The foreclosure rate was unchanged in metro Toledo at 1.98 percent of home mortgages, down from 2 percent in April, 2008.
The CoreLogic report omits homeowners who have missed just one or two monthly payments. Those figures aren t available for metro Toledo.
But an industry group, the Mortgage Bankers Association, says across Ohio close to 1 of every 12 homeowners were at least 30 days behind in mortgage payments in the first quarter of 2009. The state ranked 12th nationally in mortgage delinquencies.
Michigan, with 1 of every 10 homeowners delinquent was fourth. Nevada led the list of homeowners who were behind by at least one payment through March 31, at nearly 12 percent.
You d be surprised how quickly someone who is making their mortgage payments can find themselves in a real quandary, said Todd Cermak, a distressed property specialist at Welles-Bowen Realtors in Toledo. The biggest culprits are loss of a job in a two-income household, evaporation of overtime, and job transfers, real estate executives said.
It happens fairly frequently, Mr. Cermak said. Somebody misses a payment or is late. They make the next payment. Then maybe they fall two months behind. They liquidate their 401(k) account to catch up. But it doesn t solve the problem. It just delays things.
Some homeowners will simply turn off the lights and walk away from the house. Some will eventually be thrown out. And others, like the Johnsons and Ms. King, will work things out.
The Johnsons had longed to move to the South.
And when Mr. Johnson s employer, General Motors Corp., offered to transfer him from Toledo to Fort Worth in November, 2006, the couple didn t waste time debating the move.
They weren t worried about selling their house in Sylvania. The midsized brick home, purchased new in 2003 for $204,000, had plenty of curb appeal.
Plus, they had just invested $25,000 in finishing the basement.
They were heartened when a neighboring house sold after only seven days.
Two months after arriving in Texas, they closed on a new home. GM picked up the extra payment from January to June, 2007, as part of Mr. Johnson s benefit package.
But the Sylvania house remained unsold, and the Johnsons were now responsible for two primary mortgages, a second mortgage taken out to pay for basement improvements in Sylvania as well as utility costs and upkeep expenses on dual properties.
They took money out of their 401(k) retirement savings account and drained their savings.
By October, 2007 nine months after their arrival in Texas they stopped making mortgage payments on the Sylvania house. We didn t want to lose our house in Texas because we were living in it, Mrs. Johnson explained. But we were out of cash.
What was so disappointing to us is that we make very good money and we couldn t pay our bills, recalled the 38-year-old mother of two young children.
This was the first time we had ever gone through that.
Eight months after the Sylvania property was put on the market they lowered the asking price from $240,000 and switched agents to Mr. Cermak.
When he raised the possibility of a short sale, they were skeptical. Then he landed a commitment from the bank holding the second-mortgage to accept $5,000 on the $25,000 loan if a buyer could be found.
In February, 2008, 15 months after they arrived in Texas, the Sylvania home was purchased in a short sale for $191,000.
I cried, Mrs. Johnson said. We re pretty much starting over. But the house was sold.
The most common approaches for dealing with overdue payments is to work out a repayment plan, negotiate a reduced interest rate, or convince lenders to agree to a sale where they will receive less than they are owed, said Mr. Cermak, the Johnsons agent.
About a third of Mr. Cermak s sales involve so-called short sales.
These transactions aren t always smooth. Lenders sometimes agree to such a sale, then reject offers. It can take weeks for an answer when an offer is submitted, he added. Meanwhile, prospective buyers sometimes bail out.
About 60 percent of the 7,000 people who seek help from Consumer Credit Counseling Services of Northwest Ohio each year are behind in mortgage payments, said Marcia O Connor, divisional manager.
Northwest Ohio and southeast Michigan have some of the highest unemployment rates in the nation. In Lucas county, 12.7 percent of workers were jobless in April. Among the hardest hit counties regionally is Michigan s Hillsdale County, with 16 percent unemployment.
Pamela Mayer, of Toledo s nonprofit Neighborhood Housing Services, works with many homeowners who are in trouble. Most, however, are already in foreclosure.
A number of programs are available to assist people who fall behind in mortgages or worry about missing payments.
The state of Ohio offers $3,000 no-interest loans to cover payments. They are forgivable for a family of four making up to $39,055; due upon sale of the property for the same family making up to $69,115.
An Obama Administration program, for mortgages through Fannie Mae, Freddie Mac, and some private banks, reduces mortgage payments to no more than 38 percent of the homeowner s gross income. But he or she must first demonstrate that they can afford to own by making reduced mortgage payments for three consecutive months. Also, the mortgage cannot be more than 105 percent of the home s value.
Lots of homeowners aren t able to qualify, said Jon Modene, president of ReMax Masters in Perrysburg. So many mortgages are upside down the term real estate agents use when a seller owes more than the house is worth that a short sale is the only alternative to bringing a huge payment to closing to cover the gap, Mr. Modene said.
In some situations, however, lenders won t even discuss the possibility of a short sale until the mortgage-holder is two payments behind. The banks are forcing you to go late on your payment, Mr. Modene alleged.
Some lenders will work with homeowners before they miss a payment, added real estate agent Eddie Campos, of ReMax Preferred Associates in Perrysburg. Given the size of the problem, most lenders are eager to work with homeowners in trouble, he added. The problem is they are swamped.
Mrs. King, who has lived in a West Toledo bungalow for 10 years, found help through Toledo s nonprofit Fair Housing Center. Officials there helped her find a $5,000 grant to cover overdue mortgage payments and negotiated with her lender to convert her variable-rate loan into a fixed-rate loan that will cut her monthly mortgage payments from $700 to about $390 starting in July.
The seeds of her troubles date to late 2002 when her employer, General Mills, pulled out of its cereal plant on Laskey Road in Toledo. At 55, she was eligible for accelerated retirement. But it meant a huge pay cut. From $60,000 a year, she suddenly had to make due with $1,300 a month.
It wasn t enough to cover past bills for major home repairs, children s tuition, and other expenses incurred over the years. To get money to pay debts, she refinanced her house. Her payments would eventually rise to nearly $700 a month.
Then, when she turned 62 last summer, her pension was reduced sharply.
By July, she began missing mortgage payments. I kept seeing myself put on the street, she recounted.
She was relieved the problems were behind her. She could be found last week, scraper in hand, preparing her house to be painted.
Contact Gary Pakulski at:gpakulski@theblade.comor 419-724-6082.
