www.msnbc.msn.com/id/22300698
MSNBC TV No housing bubble popped in Ohio, Michigan Economy, not speculators and adjustable mortgages, is depressing market Image: Michigan neighborhood Carlos Osorio / AP The housing markets in Ohio and Michigan have been battered by a declining manufacturing base, stagnant population growth and low demand.
DETROIT - Michigan and Ohio share something with Florida and California -- some of the nation's highest rates of foreclosed homes and delinquent mortgages. But the reasons for their woes are as different as their climates. Battered by a declining manufacturing base, stagnant population growth and low demand for housing, Michigan and Ohio rank No. Fannie Mae, which finances or guarantees one of every five home loans in the United States, listed losses -- loans written off as having no chance of being recovered -- of $185 million for Michigan and $101 million for Ohio -- two similar states in many respects with strong ties to the auto industry. "The underlying economies of Michigan and Ohio are that bad relative to California and Florida," said Doug Duncan, chief economist for the Mortgage Bankers Association. Michigan had the nation's highest unemployment rate in October at 77 percent; And jobs and income are all-important in keeping the housing market alive. That accounted for almost 60 percent of its loan defaults in the first 10 months of this year. Once illness and divorce are factored in, cash-flow problems caused 80 percent of mortgage defaults nationwide, according to Countrywide's data; Phillip Hubbard of Flint, a town hard hit for decades by plant closings and immortalized by native Michael Moore in his 1989 film, "Roger & Me," knows first-hand how bad the housing market has become. Hubbard, 39, said he left his job of 19 years in 2005 at a "mom-and-pop" auto parts store as he dealt with a form of muscular dystrophy and found physical aspects of the job difficult. He managed for nearly two years to pay his 30-year fixed mortgage on a small ranch home he bought six years ago his through disability checks and savings, but fell behind as gas prices, property taxes, utility bills and insurance premiums escalated. He said he tried unsuccessfully to work out a new payment plan with his mortgage company. So he put the house up for sale in the spring and then let it go into foreclosure in October when he couldn't find a buyer.
Mortgage crisis inflicts collateral damage Fannie Mae's report shows the Midwest in general is suffering the largest loan losses. Of the top seven states, five are in the Midwest, with Minnesota ranked third, Indiana fourth and Illinois seventh. California and Florida are ranked fifth and sixth, respectively. Teresa Gordon, a Michigan-based owner of a real estate firm that specializes in foreclosure, said the economy is a factor in her region's mortgage mess but the blame goes around, including lenders that got too lenient and buyers who made poor decisions. "I'm one of the few people that's going to capitalize on this.
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