Mortgage broker unsure of bailout plan; foreclosure numbers show potential impact

Rose Catalano admits to being uncomfortable with the philosophy behind the recently announced federal mortgage bailout program, but she believes many people in the area could qualify for assistance.

“I think so. Yes. There are a lot of people in trouble in the area,” Catalano, with Patriot Mortgage in Fort Smith, said when asked if the bailout package announced this week by President Barack Obama would find many users in the Fort Smith area.

The “Homeowner Affordability and Stability Plan” is designed to help an estimated 7 to 9 million homeowners who are struggling to avoid losing their homes through foreclosure. (Link here to an 8-page fact sheet about the plan from the U.S. Treasury.) Federal statistics also show that just 8% of U.S. homeowners are having mortgage-payment troubles.

Catalano said until details of the bailout plan become more clear, she nor any mortgage or loan officer can provide reasonable estimates about how many people in the region might qualify for the assistance.

Recent foreclosure figures from Irvine, Calif.-based RealtyTrac provide some idea of how many homeowners in the region are in the midst of a foreclosure action.

The number of properties facing foreclosure action in the Fort Smith metro area (Crawford, Franklin, Logan and Sebastian counties in Arkansas; Le Flore and Sequoyah counties in Oklahoma) totaled 1,084 in 2008, up 84% over the 588 regional properties in 2007.

Arkansas ended 2008 with 14,277 properties facing some form of foreclosure activity. In 2007, there were 6,406 properties facing foreclosure, and 4,790 in 2006.

In January 2009, Crawford, Franklin, Logan and Sebastian counties had 79 homes in some phase of foreclosure activity, up from 77 in January 2008. (See foreclosure stats below.)

Catalano said “a lot of people” who recently lost their jobs and do not have savings are now having trouble making mortgage payments. She also said too many people in the area borrowed or refinanced at the peak of the home price, but can’t get help now because the home value is lower than the mortgage value.

She also said some people are threatening to get behind on their payments for a few months to qualify for federal assistance. That scenario bothers Catalano. So do people who made poor home-finance decisions — buying more home than they knew they could afford, constantly refinancing to pull equity out of the home. etc. — who are now being rescued by taxpayers from the consequences of those actions.

“I’m not critical of anyone in real trouble, you know, people who have lost a job and really need help. … But these people who are just waiting around for the government to help them out, that upsets me. That’s not the American way,” Catalano said.

January Foreclosure Stats
(info provided by RealtyTrac)

Fort Smith Region
Crawford County
January 2009: 35
January 2008: 22

Franklin County
January 2009: 2
January 2008: 7

Logan County
January 2009: 6
January 2008: 4

Sebastian County
January 2009: 36
January 2008: 44

Northwest Arkansas
Benton County
January 2009: 426
January 2008: 296

Washington County
January 2009: 253
January 2008: 107

Central Arkansas
Faulkner County
January 2009: 37
January 2008: 42

Garland County
January 2009: 57
January 2008: 256

Lonoke County
January 2009: 51
January 2008: 43

Pulaski County
January 2009: 255
January 2008: 251

Saline County
January 2009: 56
January 2008: 54