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The Suburbanite
  • Some Stark residents stuck in houses worth less and less

  • Many Stark County residents are dealing with the same problem: They paid more and owe more than their houses are worth today.  Now they face the problem of what to do about it, and the answers aren't so easy to find.

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  • Declining home values have trapped Randy Willey in the Plain Township home he grew up in.
    More than 15 years after he bought his house from his mother, the 44-year-old disabled man says he struggles to climb the stairs, the one-acre property is too large to maintain and the mortgage payments are almost unaffordable.
    Willey badly wants to move into a smaller, less-costly ranch home.
    But he can’t — unless he defaults on the $102,000 he owes on the house.
    Willey says he can’t retire that debt by selling the home because its value has declined by half since 2004 to less than $65,000. And Willey doesn’t believe he can find a tenant willing to rent the house and cover his $926-a-month mortgage payment.
    “I’m to the point right now I’m ready to walk away from it,” said Willey. “Everyone tells you a home’s the best investment you can make. As far as I am concerned, it’s the worst investment I’ve ever made.”
    With the values of many houses in the area falling by a fifth or even by as much as a third since 2007, a significant number of homeowners are “underwater” or “upside down.”
    In other words, they owe more on their houses than they’re worth, amid a period of high unemployment following the peaking of the filing of foreclosures in 2008. The result has been people unable to move. Residents unable to avoid foreclosure. And homeowners unable to refinance, even if they have great credit.
    PENALIZED
    One of them is Jennifer Branney, 29, who’s pregnant with her third child. She said she and her husband have been unable to get a loan to finance the construction of additional space for their crowded Canton Township home.
    That’s because they owe $93,000 on their mortgage. Their house, which would secure the loan, has fallen in value to $80,000. The couple bought it for $103,000 about five years ago.
    “I can’t live in a house with one bathroom and all these people,” Branney said. “We’ve done everything we’ve been told to do. Make your payments on time. Pay your credit card bills on time. Have your money saved up. We’ve done all of that, and we still can’t get anywhere.”
    The consequences are worse for “underwater” homeowners who can’t keep up with their payments.
    SOBERING NUMBERS
    According to the National Association of Realtors, the median sales price of existing single-family homes in Stark and Carroll counties plummeted more than 20 percent between 2007 and 2009 from $110,300 to $86,200. After rising to $111,500 for April to June of 2010 — apparently due to the expiration of an $8,000 home purchase tax credit — the median price fell to $79,500 for the next three months.
    Page 2 of 3 - Meanwhile, home sales data from the Stark County Auditor’s office, which may include “sale by owner” sales not in the association’s numbers, show that the median price of a single-family home in Stark County plunged more than 35 percent between 2007 and 2010 from $124,900 to $80,300. The auditor’s data does not include sales to family members, many short sales, sheriff’s foreclosure sales and properties over 10 acres.
    Every township and city in the county experienced overall declines in home values, according to the auditor. The worst hit was Canton, which saw median home prices fall by 73 percent from $75,000 in 2007 to $20,000 last year. All but Lake Township, North Canton and Pike Township saw median home values drop by more than 10 percent since 2007. Several areas, but not all, posted higher median sale prices in 2010 compared to 2009, apparently because of the tax break.
    “When the housing bubble burst, the equity that might have been in anybody’s home evaporated,” said bankruptcy attorney and trustee Tony DeGirolamo, who expects foreclosure sales to continue to drive house prices down. “There’s virtually no one who may have refinanced the last six or seven years that would have any equity or substantial equity in their home.”
    Lawyers say those who are “underwater” can file for bankruptcy.
    Under a Chapter 7 liquidation, the bank would still get the house, but you can walk away without owing anything more to the bank. However, your credit will be ruined and you will likely will not get approved for another home loan for years.
    Another option is finding a buyer and asking your lender to agree to a short sale. In this type of transaction, the lender gets all proceeds from the sale and forgives the remaining debt, rather than pay the costs of a foreclosure action. But if you have a second mortgage, the other lender, who gets none of the proceeds, has every reason to block the short sale, said DeGirolamo. And a short sale will still hurt your credit.
    STUCK
    For now, Willey says he doesn’t have the cash to file for bankruptcy to free him from his 33rd Street NE home.
    After paying his mother $65,000 for the two-story house in 1995, he borrowed another $30,000 in 2000 to install new bathrooms, build a new master bedroom and remodel the kitchen with maple cabinets.
    Willey, the husband of a restaurant manager, said he suffered a career-ending back injury while working at a paper company and now receives disability payments. Because of his poor health, his 15-year-old daughter has to mow the grass, shovel the driveway and do the yard work.
    Since he put it on the market in October 2009 with an asking price of $109,900, he’s gotten no offers. Banks and estates are selling homes around him for about $30,000 to $35,000, Willey said.
    Page 3 of 3 - “My only choice is to let it foreclose,” said Willey, who complains that there’s no programs to help those who are current on their mortgage payments. “I don’t know if I’d buy another house because I don’t like this feeling of not being able to get out of here.”
    Outside a 1,600-square-foot bungalow that’s two doors down from Willey, a handwritten sign says “$43,900.” ReMax agent John Wolanin is trying to sell it for new owner CitiMortgage, which foreclosed on the house last year. The previous occupant futilely tried to sell it for $59,900 last April and then for $49,900. The county auditor valued it at $89,000 in 2009.
    Wolanin, whose clients are nearly all banks, says CitiMortgage is prepared to drop the price below $40,000 if the four-bedroom home doesn’t sell within 30 days. He added that the banks are pricing homes well below  appraised value to sell quickly.
    “I don’t know if it’s going to continue to go down,” he said. “It’s near the bottom now, I would hope.”
    What is a median sales price?
    The median sales price is not the average of sales prices. To determine the median sales price, you lay out all the sales prices for a particular period of time and find the value in the middle. If there’s an even number of sales, the median is the average of the two middle figures. Median values can provide a clearer picture of the decline in home values than the mean or average because they are not affected by overly high or low sales prices for a couple of homes.