Faces of Foreclosure 53206

Wisconsin Foreclosure News

By MICHELE DERUS

It's a stretch to pay the mortgage on a $70,700 house when you make $10.87 per hour, but Patricia Wingo managed it - until a run-in at work left her unemployed.

That next job hasn't been easy to find, and now the consequences are becoming clear. In January, her N. 19th St. bungalow was among 75 in her north side Milwaukee neighborhood slapped with foreclosure actions.

"I'm going to keep this house," the former school custodian said confidently last week. "But I have to come up with $727 a month. That's a lot. Even people working good jobs are having trouble."

Wingo lives in Milwaukee ZIP code 53206, where poverty is widespread but a remarkable 67% of residents own their homes.

In 2005, 61 lenders made loans in the neighborhood - Wingo got hers in May of that year - as rising home values since 2000 promised economic stability, if not prosperity.

This year, those loans are proving onerous. The 75 foreclosure actions in ZIP code 53206 in January accounted for one-fifth of the city's 377 foreclosure filings in Milwaukee County Circuit Court.

Homeowners and renters alike are stressed, though default landed on their doorstep in many different ways.

"Will I have to move again?" a wide-eyed Jessica Harris asked last week. She clutched infant daughter Jatoria as she discovered that creditors were moving to foreclose the N. 23rd St. house she had just rented.

"They say we were late in a couple payments. I don't remember being late," said retired public school employee Johnny Banks with a puzzled frown. His N. 21st duplex is scheduled for a May 16 foreclosure hearing.

Foreclosures are a national affliction, with more than 650,000 property owners facing loss of their home due to unpaid debt, and new cases running 35% higher in this year's first quarter than a year earlier, according to RealtyTrac.com of Irvine, Calif.

Historically, 1% of mortgages end with creditors seizing the property. As 2007 dawned, however, the foreclosure rate was 1.2% nationwide and 1.4% in Wisconsin, according to the Mortgage Bankers Association.

An analysis of January foreclosure filings by University of Wisconsin-Milwaukee researchers suggests that problems in the 53206 neighborhood dwarfs that of others. Chillingly, that sample may portend more bad news.

"Absolutely, it's going to get worse - for years," said UWM research scientist Lois M. Quinn. She and colleague John Pawasarat, director of UWM's Employment & Training Institute, have tracked the neighborhood's changing fortunes for 13 years.

Their latest report , released April 11, shows why 61 lenders descended on the neighborhood of ZIP code 53206, which spans W. North Ave. to W. Capitol Drive between N. 6th and N. 27th Streets: Housing values surged while incomes fell.

"This neighborhood was a target. Predatory lenders saw the opportunity - people were strapped for cash but had lots of home equity - and they milked it," Quinn said.

What happened?

The UWM research, drawn from census data, court records and other sources, shows what happened:

• Homes doubled in value between 2000 and 2005, from $26,826 to $53,225 for the average three-bedroom house.

• Inflation-adjusted incomes declined 18.5% in those years, to $17,547 for a single-person household and $41,425 for a married couple. In 2005, 48% of the area's single family households had incomes below the federal poverty level.

• High-cost loans, peddled heavily door-to-door and on the airwaves, became big business, totaling $55 million in 2004-2005.

Lenders blame the life circumstances and careless choices of borrowers for today's foreclosures. Borrowers contend that lenders underplayed risks and overplayed the benefits of financing, and turned punitive once the loan was made.

There's some truth to both arguments, said Quinn and Lemuel Eaton, fair lending services coordinator at Metropolitan Milwaukee Fair Housing Council.

"Subprime loans were made all over our county, all over our state - but they were concentrated in 53206, where most people are strapped for cash," Quinn said. "And to people strapped for cash, these deals looked inviting."

With no margin for error, many erred, Eaton said.

"A lot of people look at it like this: 'Well, the mortgage payment's due on the first, but it's not considered late until the 15th, so I've got till the 15th to pay.' But not a lot of payments get posted immediately. People should allow at least a week for their payment to get posted," Eaton said. "I've seen late fees of $50 to $100, and some people end up in a perpetual state of lateness. They pay the late fee, but they're short for next month."

A growing chorus, including Congress and the Federal Reserve Board, concluded this spring that better lending industry governance is needed in light of excesses during the nation's 2001-2005 housing boom.

Damage apparent

Meanwhile, many residents of the neighborhood shut their doors when approached about their pending foreclosures.

Damage from the crisis is all around them. While some homes sport fresh paint and spring flowers, more than a dozen targeted by recent foreclosure actions are vacant, their windows broken and their interiors strewn with belongings and trash. One home's exterior was being stripped of its siding, day by day. None of the foreclosed properties have doorbells - just loose wires sprouting from the door frame or nothing at all.

Some say it was misfortune, not their loan, that landed them in foreclosure.

"I worked so hard to buy this house, and it feels so good to have it. God will help me find a way," said Wingo, the former school custodian who left one job before snagging another - misjudging how elusive a new job can be. Her lender has given her six months to come up with a solution, she said.

Banks, the public school retiree, said his $48,000 home mortgage was paid off when he succumbed to the allure of a new loan offering quick cash.

"We got in debt, so we borrowed from them, and paid off our debts. We were doing OK," Banks said. But after a late fee was imposed, he said, "My payments got worse. It was $300 a month. Now it's $400."

Banks and his mother, Verna, who share the duplex, expressed confidence that their lawyer will straighten matters out.

"I've used most of my retirement (funds) to keep the house. Now I don't have anything left," said Louis Davis Jr., 56, a disabled truck driver, of the N. 10th St. house where his kids grew up.

Davis suffered an on-the-job back injury in 2005 that he and his former employer have been fighting about in court ever since.

"I pray the Lord gives me strength. I've never felt so lonely," he said

 

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