High home foreclosures signal Ohio's bigger economic problems
Ohio again leads the nation in home foreclosures, an indicator of how the state's lag in adding jobs is leading people to have trouble paying their bills, economists say. New foreclosure filings in Ohio increased by 1 percent in the third quarter of 2006 from the second quarter, trailing only Michigan and Rhode Island for the largest increase, according to the study of 42.6 million residences with one to four units.
High home foreclosures signal Ohio's bigger economic problems
Associated Press
COLUMBUS, Ohio - Ohio again leads the nation in home foreclosures, an indicator of how the state's lag in adding jobs is leading people to have trouble paying their bills, economists say.
Besides joblessness and high gasoline prices, high interest rates are squeezing consumers who face high credit card debt and increasing house payments if their mortgage has an adjustable rate.
"The fact is we have a continuing problem that isn't going to magically disappear overnight," said Zach Schiller, research director for Policy Matters Ohio, a Cleveland-based economic research organization.
About 3.3 percent of Ohio homes and small apartment buildings were in foreclosure in October through December, the highest rate of any state and three times the national rate of 1.1 percent, said a study by the Mortgage Bankers Association. Ohio's rate has been higher than the national average for every quarter since the end of 1998.
New foreclosure filings in Ohio increased by 1 percent in the third quarter of 2006 from the second quarter, trailing only Michigan and Rhode Island for the largest increase, according to the study of 42.6 million residences with one to four units.
Plus, 7 percent of loans in Ohio were delinquent in the period, meaning payments are at least 30 days past due. The national delinquency rate was 4.7 percent.
Consumers are also late more often paying other types of loans, such as home-equity loans, car loans and credit cards, according to a study by the American Bankers Association.
Delinquencies and foreclosures act as a barometer for an area's economy and are at their highest levels in regions where people are having trouble finding jobs, said Mike Fratantoni, senior economist with the Washington-based Mortgage Bankers.
Ohio lost 4.5 percent of its jobs from 2001 to 2003, more than double the national rate of 2 percent, said Richard DeKaser, chief economist at Cleveland-based National City Bank. Since then, he said, "The nation has since recovered those jobs and added more, but Ohio hasn't."
Foreclosure filings quadrupled from 2003 to 2005 in 61 of Ohio's 88 counties, reported Policy Matters Ohio.
Housing activists also have blamed Ohio's high foreclosure rates on predatory lending practices, such as inflating an appraisal to dupe a consumer into taking out a loan that's higher than the home is worth.
A new law takes effect this year to control such practices, aimed mainly at people with poor credit trying to buy homes. It tightens regulations on sub-prime loans and, for the first time, allows borrowers to use Ohio's consumer protection law to sue lenders that aren't covered by federal lending regulations. The attorney general can sue lenders to stop fraudulent practices.
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