If you’ve read the papers lately, then surely you’re aware of the current problems in the mortgage lending market.  According to RealtyTrac’s August 2007 U.S. foreclosure market report, the state of Georgia ranked fourth in the nation.  These numbers are troubling, with one foreclosure for every 165 households in our state, accounting for six percent of the nearly 245,000 foreclosures reported nationwide.  Of Georgia’s 159 counties, Clayton County topped the list with the highest rate of foreclosure for August 2007 – one foreclosure for every 90 households.  In our 51st District, the numbers ranged from somewhat troubling – Dawson County with one foreclosure for every 534 households in August – to very good – Union County with one foreclosure for every 12,393 households.  The numbers for September 2007 have come in a little better, with Georgia ranking sixth on the list of states with the highest rate of foreclosure. 

In other parts of the South, such as Charlotte, NC, home prices were actually up for the month of September, which contradicts the trends we keep hearing about.  Home prices in Charlotte were up 9.3 percent to an average of $236, 061.  Data like this suggests that problems in the real estate market may not necessarily ruin our nation’s economy, as many forecasters have suggested.  On the contrary, many proponents of the free market have suggested that the real estate market will sort itself out, as it usually does.  In addition, consumers with good credit and a down payment should have no trouble getting mortgages at good rates.  Also, there has not been a better time in years to find bargains on the existing inventory of new homes.
 
Keep in mind, real estate values and prices, and the velocity of sales is generally a function of local market conditions and valuation.  The market is usually never as good or as bad as reported by the local or national press.  In North Georgia and Metro Atlanta, we have not seen the unsustainable and unreasonable appreciations that have occurred in some areas of the country.  Prices did not rise as much, so they will not fall as far in Georgia. 

As we approach the 2008 Legislative Session, some of my colleagues in the Georgia General Assembly may introduce and discuss new laws in an attempt to curb this explosion of foreclosures and loan defaults.  New laws may or may not be the answer to this problem, and we definitely don’t want to see taxpayers required to bail out those who made risky financial decisions.

In the meantime, there are ways that consumers can avoid the personal financial disaster of foreclosure.  If you are facing unemployment or have money problems, you may be able to keep your home if you take the right steps.  If your family is facing financial problems due to major life changes, and you can’t pay your bills, look closely at what you owe and what you earn.  You must eliminate unnecessary spending and reach out for help if you still can’t make ends meet.  Taking immediate action can help you protect your family from the loss of your home. 

Steps to take when you can’t pay your mortgage: 

1.       Contact your lender as soon as you have a problem:  Lenders want to help borrowers keep their homes because foreclosure is expensive for lenders, mortgage insurers and investors.

2.       Talk to a housing counselor:  A good counselor will help you create a monthly budget plan to ensure you meet all your monthly expenses, including your mortgage payment.

3.      Prioritize your debts:  Rank your debts by their importance.  You will need a new, tightened budget if you lose a job, etc.  Prioritize your bills and pay those most necessary for your family – food, shelter and utilities.

4.      Explore loan workout solutions with your lender:  If you can keep your mortgage current, do so.  If you find you are unable to make your mortgage payments, you may qualify for a loan workout option.  Check with your lender to see what the best available plan is for you.

There are no easy solutions to personal crises such as foreclosure.  Many times foreclosure is the result of major life changes like job loss, cuts in work hours or overtime, retirement, illness, injury, the death of a family member and/or divorce or separation.  However, by utilizing all of the available resources, such as non-profit credit counseling, free services offered by lenders and real estate companies, etc., Georgia homeowners can do everything in their power to stay in their homes.   

In Georgia, we’re creating good jobs, and we have families and retirees moving to the state.  We have a favorable cost of living and amenities that people want.  Ultimately, it is my hope that in the months ahead we will see marked improvement and a reduction in the number of foreclosures in Georgia.  What we don’t want to see is lawmakers at the state and federal levels wading into this situation in search of a quick fix.  We want to see our citizens staying in their homes, raising their families and pursuing their dreams. 

Please feel free to contact Sen. Chip Pearson at his office in Atlanta at 404.656.9221 or by email at chip@team51.org.