Before Steve Lockwood even heard the latest numbers, he had a “gut feeling” the foreclosure rate was declining in Frayser and Raleigh, the two communities he serves as executive director of the Frayser Community Development Corp.

He was right. Both areas saw improvements in August, with Frayser’s 47 foreclosures marking a 16 percent decline and Raleigh’s 34 foreclosures marking a 29 percent decline from the same month a year ago.

“That doesn’t surprise me and, of course, it warms my heart,” Lockwood said. “That is pretty encouraging.”

The entire foreclosure report for August, in fact, is pretty encouraging. Shelby County saw 472 residential foreclosures for the month, a 17 percent decline from 570 in August 2007 and a 26 percent decline from 634 in July 2008, according to the latest data from Chandler Reports, www.chandlerreports.com.

Good news

Among 472 foreclosures last month, 424 were on single-family homes, 13 were on planned-unit development (detached) homes and 12 were on condominiums.

Compare that to the previous month and the same month a year ago. In July, there were foreclosures on 567 single-family homes, 26 PUD (detached) homes, 11 zero-lot-line homes and seven condominiums. In August 2007, there were foreclosures on 511 single-family homes, 14 condominiums, 13 PUD (detached) homes and 11 duplexes.

Lockwood said word of mouth about the foreclosure problem – from the efforts of housing counselors and foreclosure victims themselves – and lenders’ willingness to fix the rate on adjustable-rate mortgages for at-risk homeowners can be credited for the recent downswing.

“I’m sure some folks are resolving their potential foreclosures without our help. And that’s a good thing, not a bad thing,” he said. “It’s probably a combination of, A, the market running its course, and, B, the lenders more amenable to working deals out. Lenders are seeing that it’s in their best interest to deal.”

Of course, not all was good in Frayser’s 38127 and Raleigh’s 38128 ZIP codes. The areas ranked first and second, respectively, for most foreclosures in the county in August, positions the areas often hold.

As Emily Trenholm, head of the Community Development Council of Greater Memphis, pointed out, foreclosure isn’t going away despite the improvements.

“We’re still suffering from the opposite problem of there’s a lot of people and we’re not reaching them all,” she said.

Finding strength

One trend of note is foreclosure’s reach into the suburbs, where home prices are much higher. That has resulted in a rise in the average tax appraisal on foreclosed homes over the past year.

August 2007 saw an average foreclosure tax appraisal of $94,959; last month it was $111,766.

The simple fact of more expensive homes being foreclosed in places such as Arlington, Cordova and Collierville is making a huge impact.

“Each foreclosure out east brings a whole lot more risk,” Lockwood noted.

The problem is by no means under control, and its eastward growth brings a new set of issues.

Lockwood said plenty of issues remain unresolved – from how the Housing and Economic Recovery Act of 2008 will affect Memphis to how the boarded-up houses in places such as Frayser and Raleigh will find new life.

“What’s next is figuring out how to put people back into houses, how to take these deflated housing values and turn that into a strength by selling people houses that are really affordable,” he said. “Partly this federal bill ought to weigh in on that and be helpful. Part of it is just general perceptions of letting people know that they can get into houses really inexpensively. But we need work on the mortgage side to get the bankers to help us lend this stuff.”

Still, the slightly declining numbers have given Trenholm and her organization a glimpse at what they would like to be doing for Memphis residents instead of foreclosure counseling.

“In terms of the counseling network, we used to focus most of our activities on home ownership,” Trenholm said. “I want to go back to that. It’s still a great way for people to acquire assets, but we’re so busy trying to get the word out about foreclosure counseling that we’re giving enough emphasis to that. If we can go back, nothing would make me happier.”

 

source: The Daily News, Thursday, September 11, 2008