Foreclosures in Kokomo
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Foreclosures Still Hurting Kokomo
Last November, I posted the article Foreclosure Hurts Everyone in and around Kokomo.
The hurt has definitely spread much wider and deeper than a year ago! If you have paid attention to the news or kept your eyes on Kokomo Market Statistics or Howard County Sheriff’s Sales, you know foreclosures are hurting almost everyone and everything around us.
- Have you tried to get a home loan, a car loan, a credit card and been turned down?
- Have a retirement account that has lost money?
- Has your credit limit on charge cards been reduced?
- Has you home equity line of credit been frozen or canceled?
- Lost your job or fear losing it or have your hours been cut?
- Do you owe more on your house than you can sell it for?
All of these problems and many more are the result of foreclosures throughout the country! It’s somewhat difficult to understand how foreclosures can have that much impact on the economy. But if we try to bring it home to Kokomo, it seems a little easier to grasp.
Three years ago Delphi declared bankruptcy. When they restructured, many people making very good wages lost their jobs. Many of those people had houses to sell, so they put them on the market. All of a sudden there was a huge influx of houses for sale in the Kokomo area.
Unfortunately, the number of buyers didn’t increase. In fact because of fear of how Delphi’s bankruptcy would impact Kokomo, some potential buyers decided to take a “wait and see” attitude.
That meant that some sellers who really needed to sell their homes couldn’t get them sold. With reduced wages or no job, many sellers had no choice but to stop making payments and let their homes go back to the bank.
Now let’s say in 2007 there were 410 home that went “back to the bank”. And that bank happened to be the fictitious United Bank of Kokomo (UBK). UBK was depending on those loan payments to pay their employees, pay interest on deposits and make home loans and car loans to other people.
Let’s say those 410 loans averaged $100,000. That would translate into UBK losing $41 million dollars! Can you even imagine having $41 million dollars, let alone losing that much?
That is $41 million dollars UBK did not have to pay their employees, so they had to lay-off half their employees.
With all that money lost, they didn’t have much money to loan to people to buy new houses, cars, etc. So they had to cut down on the number of loans they made. To do that, they decided to to be very careful about who they loan money to - they tightened loan requirements. Higher credit scores, larger down payment, etc.
Now, UBK isn’t making as many loans as it once did, so they don’t need as many employees in their loan departments – so more lay-offs.
What do you think happens to the homes of the UBK employees who were laid-off? Yep, some of them end-up in foreclosure.
In this scenario, we have two companies, one real and one fictitious. Between the two of them, over 2000 families have been directly impacted by a changing economy. But multiply our one small town by all the small and large towns throughout the country and we get a picture of the economic chaos that hit the financial institutions this fall.
All those bargain foreclosure properties in Kokomo have hurt you and they have hurt me. As I said before, Foreclosures Hurt Everyone!
How has the changing economy impacted you?
How have foreclosures effected you?
Please leave a comment below…
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