By Annie Goeller, Daily Journal of Johnson County staff writer
Roughly one in every 10 Johnson County homes with a mortgage went into foreclosure during the past four years.
That means since 2005, more than 3,000 local families were forced to leave their homes when they could no longer afford their house payments.
The high numbers surprised community leaders, who wondered what should be done to help the struggling families.
"I did realize we had a lot of foreclosures. I did not realize it was that big of a number," Greenwood Mayor Charles Henderson said.
The impacts are far-reaching, beginning with the families who watch as their bills pile up until they are forced out of their home, left to find a place to rent until their severely damaged credit can be rebuilt.
And the damage stretches to other homeowners who see the value of their investment drop yearly, sometimes putting them upside down, owing more than their house is worth.
But one of the biggest concerns is for the families who are losing their homes and making sure they are able to keep their jobs, keep their children in school and find a new place to live, Franklin Mayor Fred Paris said.
"I am concerned with the overall health of the families. I'm not exactly sure how we help," he said.
That has been a question raised by leaders across the nation, who are seeing numbers the same or worse than Johnson County's.
In December, one in 10 American families was either behind on their mortgage or had already lost their home to foreclosure.
And in the fall of 2008, Indiana ranked 10th in the country for foreclosures.
In 2008, local foreclosures hit a high in Johnson County of 1,077 new filings, or more than 3.5 percent of all homes in the county with a mortgage. That peak was a 21 percent increase from 2007.
A nationwide company, RealtyTrac, tracks homes that are in or near foreclosure and lists them for sale on its Web site. RealtyTrac showed 484 homes and properties in foreclosure.
Johnson County's numbers have been high for years, compared with others in central Indiana.
Since at least 2005, Johnson County has had a higher percentage of homes with a mortgage in foreclosure than Hancock, Hendricks and Hamilton counties.
From 2005 to 2008, the number of foreclosures totaled more than 3,400 homes, making up nearly 12 percent of the homes with a mortgage in the county, or about one in 10, according to the U.S. Census Bureau.
During those years, more than 700 families each year were losing their homes to foreclosure, the same years that Johnson County was setting records in the number of new homes being built.
Real estate agents and bankers list that building boom as a major factor in local foreclosures.
Johnson County has an abundance of production-built homes, or homes that aren't custom built, real estate agents and bank officials said.
Many of those neighborhoods were being built during the time that homeowners could get loans easily, even if it is likely they shouldn't have, a main factor in the national foreclosure crisis, said Tom Johnson, senior vice president of F.C. Tucker's residential division.
In many cases, the homes' mortgages were financed by the developers, who were not as strict as banks would be with qualifications for mortgages, Mutual Savings Bank President Bob Heuchan said.
Buyers weren't given all the information they needed, such as how much their payment could increase with a higher interest rate and when property taxes kicked in, and they were set up to fail in a house they couldn't afford, he said.
"You want to believe everyone is ethical and does what is in the best interest of the borrower, but we've learned that isn't the case," Heuchan said.
Since then, the building boom has stopped, partially due to the foreclosures and a sluggish housing market.
But some said the problems aren't over yet.
One big issue is unemployment, Lincoln Bank President Jerry Engle said.
When people don't have a job, they can't pay their bills, including their mortgage. Until unemployment levels start to drop, little improvement will be seen, he said.
"If they don't have a job, they can't do anything. So we've got to get people back to work," Engle said.
And the problems that led to the foreclosure crisis haven't been solved.
The government helped bail out some companies that faced problems, but the system hasn't been fixed, University of Indianapolis finance professor Matt Will said.
Something has to be done to stop predatory lending, or lenders who tell buyers they can afford much more than they can. That is one of the basic problems in the system, he said.
And lenders have to work more with homeowners who are about to lose their homes, Heartland Community Bank President Steve Bechman said.
One option local banks use is a deed-in-lieu, which takes less time and money than foreclosure and involves the bank taking back the property and forgiving the owner of the debt.
That option still has a damaging impact on the owner, who will suffer in their credit and likely not be able to get a mortgage for years, but the impact is less than foreclosure, Heuchan said.
Foreclosure also has further reaching impacts, including damage to the housing market.
No one is sure how much property values could drop because of the sluggish economy and foreclosures, but the impact began showing up in 2008 property assessments for taxes, where more than half of home values dropped.
That will continue and likely be more noticeable, agents said.
Some homeowners have been left upside down on their mortgage, meaning they owe more than their home is worth as the value drops in the market, Johnson of F.C. Tucker said.
In some neighborhoods, where there are more foreclosures, the impact is worse, but the entire market in the county has been affected and will be affected until the numbers level off, said Kyle Johnson, who manages Century 21 Realty Group-Ruch Hicks' foreclosure division.