The U.S. housing industry is a mess, and in few places are housing problems more evident than in Lucas County. A moratorium on home foreclosures is warranted until problems with foreclosures are resolved.
Banks are on track to repossess 1.2 million American homes this year, up from 1 million last year. Nearly one of four home sales is of a foreclosed or distressed property.
Bank of America has halted foreclosure sales nationwide, amid growing evidence that some of its mortgage lenders used improperly completed and even fraudulent documents to foreclose on homes.
In Ohio, nearly 46,000 homes have been foreclosed on this year. State Attorney General Richard Cordray has sued GMAC Mortgage and its parent company, Ally Financial Inc., to halt what he calls “fraudulent and unfair and deceptive practices.”
In the Toledo area, the housing market is on life support. In the second quarter of this year, 526 foreclosed homes were sold in Lucas County. The average selling price was a little more than $54,000 — the lowest of any major urban county in Ohio.
Overall, such homes are selling for 53 percent less than they would have if they were not foreclosed, the second-biggest gap among Ohio's eight urban counties, behind only Cleveland's 59 percent. Last spring, only homes in the Youngstown area had a lower median sale price — $75,100 — than the Toledo area's $90,900.
A real estate salesman told The Blade that only Detroit and Flint, Mich. — both especially hard hit by the struggles of the auto industry — have houses available for less money. That's not the sort of company the Toledo area wants to keep.
Foreclosed homes are a bargain here, in part because so many of them are in poorer neighborhoods where average home values are lower. Many empty homes are vandalized, which pushes down the price even more. But foreclosures drive down the value of the homes around them, whether or not they are for sale.
Recent changes in federal regulations have been a mixed blessing. Rules that allow people to stay in their homes for as long as 90 days after foreclosure are designed to help families. Some occupants, however, use the extra time to destroy the home, further reducing resale value for the bank.
Banks helped to create the housing problem by making it easy for people to buy homes they couldn't afford. Then banks were slow to take advantage of federal programs designed to keep people in their homes by rewriting mortgages. Now, it appears that callous lenders may have been signing off on foreclosures without even reading or verifying the paperwork.
This week, the Obama Administration rejected a national freeze on foreclosures. White House officials argued that a moratorium would undermine confidence in the already fragile housing market.
But revelations about thousands of cases of faulty paperwork are discouraging buyers from purchasing distressed properties. It's hard to imagine that stopping foreclosures until the mess is cleared up could make matters worse.
Protecting families that are on the verge of losing their homes illegally would be worth the price.