Mortgage crisis hit home: Foreclosure rate rises in Beaufort County

In the first quarter of 2008, foreclosures surged 112 percent nationally over the same period a year ago, according to the real estate marketing firm RealtyTrac.

Beaufort County has not been immune to the crisis.

Foreclosures were up 118 percent in the county during the first quarter of 2008 compared with the first quarter of 2007, increasing to 70 from 32, according to RealtyTrac, an Irvine, Calif.-based company that collects foreclosure data nationally and publishes the U.S. Foreclosure Market Report monthly.

Separate figures are not available for northern and southern Beaufort, according to a RealtyTrac.

While the numbers might seem high, they're much better than some other places.

One in every 1,117 homes in Beaufort County is in foreclosure. But in Chatham County, Ga., one in every 233 houses is in foreclosure, according to RealtyTrac figures. The national average is one in every 519 houses.

Nationally, much of the blame has been put on mortgages that didn't require as much documentation as in the past or that were confusing to buyers.

Some lenders allowed buyers to borrow 100 percent of a home's value, with no down payment. Many properties have lost value and those buyers ended up owing more on the home than it was worth.

Some mortgages required no proof of a buyer's income, even if the buyer had poor credit, and some had interest rates that adjusted upward after the first year or two of payment -- resulting in steep increases in monthly payments.

Real estate prices also have fallen recently as a glut of homes have been put up for sale. At the same time, mortgage lenders have increased scrutiny on potential borrowers, making loans more difficult for marginal buyers to obtain.

In addition to those issues, there is another factor causing people to lose their homes: loss of their income.

Carolyn Lecque is a regional director of The Homeownership Resource Center, a nonprofit organization that works to help people who are in trouble with their mortgages. The agency has worked with the Lowcountry Community Development Corporation to start a series of seminars to help homeowners in trouble save their homes.

At the seminars, which have been held throughout the state and in Beaufort County, counselors always ask what major factor led people to fall behind on their mortgage payments. The answer is usually a loss of income, said Lecque. Sometimes one person in a family has lost a job, had to take a lower paying job or gotten sick, she said.

Loose lending standards in recent years haven't helped matters, Lecque added. "Lenders would come knocking on doors offering to let people borrow money. People would sign the loans -- they didn't know what was happening."

Lecque estimates more than 90 percent of the people her group helps entered into mortgages in the past three years -- not only first-time homebuyers but also those who'd bought before -- and purchased homes beyond their means or chose risky mortgages.

FIRST, CREATE A BUDGET

For homeowners, there is a silver lining: "The bank doesn't really want to take back any property," said Richard Roarke, vice president and a mortgage loan officer for North Carolina-based BB&T's Hilton Head market.

Because a bank doesn't want to own property, Roarke encourages homeowners who are feeling pinched to sit down with their lenders to try to work out a manageable payment plan.

"The mortgage holder is someone who is our client, and we want to keep them as a client," Roarke said.

Mike Kristoff, mortgage division president at CoastalStates Bank based on Hilton Head, echoed Roarke's statements.

"If clients have difficulty making payments, we try to work with them," he said. "We're not in the business of owning the real estate. We're in the business of getting paid back."

Local lenders have been easy to work with, for the most part, Lecque said. But most of the burden in saving a home from foreclosure rests with the owner, and how disciplined they are with money often makes the difference, she said.

At The Homeownership Resource Center seminars, people behind on home payments are asked to make a budget. Those budgets track all their spending, from the beauty salon to church donations.

"For 9.9 out of 10 people, this is the first time they've thought about their spending habits," Lecque said.

Typically, homeowners need to find a way to cut expenses before they can be helped, she said.

A HOMEOWNER'S STORY

At a recent seminar, one homeowner said he'd cut all the expenses he can, but is still close to losing his home.

Two years ago, John Hanzlik would have been a success story.

The Bluffton resident started his own business installing natural-gas fueled appliances and had a client list of more than 2,000 people.

He'd bought a modest three-bedroom home on Knightsbridge Road in the Woodbridge subdivision in Bluffton that he'd improved with a Jacuzzi and a rose garden he tended.

Today, that's all changed. Hanzlik is two months behind on his mortgage payments.

"I always pictured my life as a house with a fence around it and a dog in the yard," Hanzlik said. "And now I can't afford it."

His once-strong business was damaged because he couldn't work during a long illness and because construction of new homes has slowed.

Now, business appears to be improving, he said, but he still doubts he'll be able to hang on to his house.

"The work is starting to come back in," Hanzlik said. "If I could just stall them. If I could have a couple more months."

He has canceled his health insurance, cable television and Internet. He can't sell his Dodge Ram 1500 pickup -- he needs that for work. Likewise, he can't stop paying worker's compensation insurance for his company or avoid his property owners' association fees.

He rarely leaves the house unless his company, The Gas Man Installations, has a job.

"I don't even leave the house unless I know I'm going to get paid," he said.

He is trying to sell his home. But even that seems impossible. Hanzlik says he can't afford the Realtor's fee that would be deducted from the proceeds of a sale. He can't afford to advertise the house. And he can't put a "for sale" sign up in his neighborhood because the subdivision's rules don't allow it.

LOOKING FOR A MIRACLE

People like Hanzlik are the minority of folks who come to seminars by The Homeownership Resource Center.

Lecque estimates that the center can help 70 percent of the people who contact it for assistance.

Sometimes that success is getting a lender to modify a loan by reducing the interest rate or monthly payment or getting an extension on the term of the loan.

Sometimes, however, success means giving a home back to a lender just to save the homeowner's credit rating. If the amount owed isn't above the value of the home and the owner is willing to forfeit any equity earned, some lenders will take the deed to the home back without foreclosing, Lecque said.

The owner doesn't get to keep the house, but the process, called deed-in-lieu, leaves them without the black mark of a foreclosure on their record, she said.

Then there are the other 30 percent -- the ones who can't be helped.

Hanzlik says that's where he falls in. He can't get his income high enough or his expenses low enough to use Lecque's group. And his lender hasn't let him pay only on the principal to help catch up on payments, he said.

"I leave it in God's hands," Hanzlik said. "If He wants to help, He'll help. If He doesn't, He doesn't."

That could be a theme among those looking for a financial miracle to save their home.

One woman at the seminar who didn't want her name used was working with Alma Stuckey, a program coordinator with the Lowcountry Community Development Corp., to find a way to contain her budget and get relief from mortgage payments.

"Let's hope for a loan modification," Stuckey told the woman.

"I'm praying for one," she replied.