Printed from the Charlotte Observer -
Posted: Thursday, Aug. 14, 2008

Mecklenburg leads surge in N.C. foreclosures

By Stella M. Hopkins and Ted Mellnik
Published in: 'Nightmare' updates
  • Local resources include:

    Alliance Credit Counseling, 704-341-1010 or


    Legal Aid of North Carolina, 704-971-2621.

    Prosperity Unlimited, 704-933-7405.

    United Family Services, 704-332-9034.

    HOPE Hotline, 888-995-HOPE (888-995-4673).

    For more, go to North Carolina's foreclosure

    help site at


  • Additional aid in North Carolina

    In North Carolina, people could soon have even more help fighting foreclosure.

    Lawmakers have approved legislation that requires mortgage servicing companies to send homeowners a new 45-day notice before beginning a foreclosure proceeding. During that added time, the banking commission would contact homeowners and provide counseling options to avoid foreclosure. Experts believe many people don't know that help is available to avoid foreclosure and so may unnecessarily lose their homes.

    The measure, which the state estimates could help as many as 25,000 people, also brings new attention to identifying wrongdoing.

    Only homeowners with subprime loans, typically with high rates, would be eligible. The commission will be reviewing the loans to see if they comply with N.C. law, said Mark Pearce, N.C. deputy commissioner of banks.

    “We believe there were significant problems in some of the subprime loans made in the last few years,” he said. “Traditional counseling … doesn't figure out whether the homeowner should have gotten the loan, whether there was fraud or predatory lending.”

    Gov. Easley is expected to sign what he has called this year's “most important legislation.”

    Foreclosure prevention is important for individual homeowners, but also for communities. Homes lost to foreclosure drag down nearby property values, which makes it hard for neighbors to sell their homes and can result in more foreclosures. Cities lose property tax revenue. And empty houses become havens for crime. In Charlotte, some fairly new subdivisions with high foreclosure rates are afflicted with crime and decay usually associated with older inner-city neighborhoods.

    “Foreclosures have a cascading effect on the community,” Pearce said. “We're trying to prevent that cycle from feeding on itself.”

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    So far this year, foreclosure counselor Kerri Roseman has worked with 216 people fighting to save their homes.

    That's one-third more than she saw all of last year.

    “Some of the people don't have enough money with gas and food prices going up,” said Roseman, who works for Prosperity Unlimited, a nonprofit serving the Charlotte area. “I see people who lost their jobs, people whose interest rates have gone up, some who just had bad budgeting.”

    Statewide, N.C. foreclosure filings were up 19 percent through June, compared with the first six months of last year, according to Observer analysis of state data. These filings mark the start of foreclosures. Filings this year could top 60,000, an increase of more than 10,000 from last year's historic high. Some homeowners will work out repayment plans. Many won't and will lose their homes in final foreclosure sales.

    Mecklenburg County is the state's foreclosure epicenter with the largest number of foreclosure filings, by far, and one of the highest rates. Double-digit increases in six surrounding counties mean the area accounted for 29 percent of threatened foreclosures.

    The foreclosure mess here is part of a national housing crisis rocking the economy. Last month, Congress passed legislation that includes help refinancing mortgages for distressed homeowners. The housing rescue plan is scheduled to be effective Oct. 1 – too late for many. But the bill could bring relief for the thousands of people receiving foreclosure notices in the months to come.

    “It's got huge potential,” Mark Pearce, N.C. deputy commissioner of banks, said of the new loan plan. However, he added, “I don't think this program is going to resolve the foreclosure problem.”

    Meanwhile, people keep flocking to Roseman. She aims to see three a day, allotting two-hour appointments so she has the time to understand their needs. Most days now, she's seeing four or five people, some coming from several counties away.

    “I've definitely gotten busier,” she said.

    She hopes the new federal bill will help more of her clients, but Oct. 1 is still weeks away.

    “We're trying to hold on until then,” she said.

    Discouraging numbers

    By several measures, Mecklenburg's foreclosure filings are woeful.

    The 4,349 filings through June were the most of any county, exceeding second-place Wake County by nearly 2,000, the Observer found, using data from the Administrative Office of the Courts in Raleigh.

    Mecklenburg filings accounted for more than 15percent of the state's total, although the county is home to 9 percent of North Carolina residents.

    The number of filings increased by 557 from the first half of last year, the highest of any county. That 15 percent increase is below the state average, but that's because Mecklenburg already has such a large number of problem loans.

    In 2004, Mecklenburg had the state's highest foreclosure filing rate. So far this year, it's in third place.

    The No. 2 spot goes to Franklin County, near Raleigh's Wake County, the heart of the state's other large metro area. At 331, Franklin's number of filings is comparatively small, and the 6 percent increase modest.

    Several Raleigh area counties and five counties immediately surrounding Mecklenburg – Gaston, Lincoln, Iredell, Cabarrus and Union – have foreclosure rates above the state average. Such metro concentrations are likely in part because of heavy building in lower price ranges, often targeting first-time homebuyers and financed with little or no down payments, Pearce said. Those loans have had high default rates.

    “In those areas, I'm expecting to see more of a consistent uptick,” Pearce said.

    The North Carolina coast also is seeing a spike in foreclosure activity. Dare County, stretching along the Outer Banks, has the highest foreclosure filing rate, more than double the Mecklenburg rate. The rate – foreclosure filings per 1,000 people – is 24 in Dare versus 10.5 in Mecklenburg. More than half the county's houses are owned by non-residents, many as vacation homes or investment properties.

    Those second-home properties are where Charles Evans, a real estate attorney in Dare County's Manteo, said he is seeing the foreclosures.

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