Traverse City Record-Eagle

Residents caught in grip of failing state, national economies

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June 29, 2008

Hundreds in region face foreclosure

By BILL O'BRIEN

Special Report:
Down, But Not Out

This story is one in a three-day series that examines the lives of those caught in the grip of the failing state and national economies, and offers snapshot examples of how your friends, family, neighbors, and communities cope during bad times.

Return to the Record-Eagle Monday and Tuesday for more stories and photos, and read the full series at record-eagle.com/
economy.

GAYLORD -- Susan Forcier loved the 10-acre, Hayes Township spread she called home for nearly five years.

She and her then-husband invested plenty of sweat equity in the four-bedroom ranch over that time, adding a garage and replacing windows, doors and fixtures throughout.

"We put $90,000 of our own money in it," she said. "It was a beautiful home."

But divorce and escalating mortgage costs eroded her ability to stay above water. Her finances began to unravel, and now the beloved house and grounds are no longer home.

Forcier today is a single mother with a 12-year-old daughter. Over the past year she watched variable interest rates push her house payment to $1,500 a month, almost triple the previous payment, and late fees and penalties pulled her under.

"I couldn't swing it ... I couldn't even come close," said Forcier, 43, who last month finally lost the home to foreclosure. "At $1,500 a month, there's no catching up."

Forcier is among hundreds of northern Michigan residents -- and thousands across the state -- caught in a seemingly endless surge of home foreclosures. Some analysts anticipated a rebound in housing toward the end of last year, but residential foreclosures in Michigan instead accelerated this spring.

Foreclosure filings across the state covered 10,269 properties in April, according to RealtyTrac's national real estate data bank. That's up 8 percent from March, and 49 percent from April 2007. RealtyTrac said a majority of those filings were from properties that went to sheriffs' auctions, meaning most owners gave up hope.

Michigan remains among the nation's home foreclosures leaders, ranking sixth behind California, Florida, Ohio, Arizona and Texas.

Three counties in metro Detroit, Wayne, Oakland and Macomb, comprise two-thirds of the new foreclosures in Michigan, evidence that the auto industry's slump is hammering the housing market.

But almost 250 foreclosures are pending in northern Michigan, including 74 in Grand Traverse County, 35 in Charlevoix County and 25 in Emmet.

"The weakness is not the fact that housing pricing is out of line, but it's the fact that (Michigan's) economy is in such poor shape," said William Strauss, a senior economist with the Federal Reserve Bank of Chicago.

The state's job market peaked eight years ago this month, Strauss said, and since then the unemployment rate climbed to the highest in the country, currently at 8.5 percent. Other business sectors have not replaced the loss of good-paying manufacturing jobs, he said, further hindering the state's ability to reverse the housing downturn.

"It creates a downward drag on demand," Strauss said. "It's not a good situation at all."

Forcier tried to head off foreclosure by selling her home, but couldn't find a buyer. To make ends meet, she cut back on expenses, canceled her satellite television service, then her land telephone line. She sold personal items like jewelry, clothing and her musical instruments to raise cash, and kept her home's thermostat at 55 degrees over the winter.

"I tried to scrimp and save. I tried to cut back on everything," said Forcier, who still found herself facing difficult economic choices she'd taken for granted just a few years ago.

"I'd ask myself, do we need heat or do we need electricity," she said.

Kimberly Pontius, executive vice president of the Traverse Area Association of Realtors, is hopeful foreclosure numbers will begin to improve by year's end. A $300 billion mortgage rescue package working its way through Congress should provide some help to overstretched homeowners in coming months.

"I think from a foreclosure standpoint that we may have seen the worst of the storm," said Pontius, who added a caveat: other economic factors like high gas and food prices could chill a housing turnaround.

"There's a lot of different variables," Pontius said. "I do think energy prices are going to have an impact on consumer confidence and spending."

Losing her home "devastated" Forcier, but she considers herself luckier than many who've endured the ordeal. Her parents helped her buy a smaller house near downtown Gaylord, aided by a bit of irony -- the $60,000 purchase price fell 40 percent below the home's assessed value because of a foreclosure on the previous owners.

"It's going to be OK," Forcier said. "I'm going to make this into a nice house, a real nice house."

Foreclosures in northern Michigan

County: No. of pending foreclosures

Grand Traverse: 74
Charlevoix: 35
Emmet: 25
Cheboygan: 16
Wexford: 13
Antrim: 12
Crawford: 11
Leelanau: 10
Otsego: 10
Kalkaska: 10
Benzie: 9
Manistee: 8
Missaukee: 6

Source: RealtyTrac

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