More foreclosures likely

Louisiana Foreclosure News

By ANA RADELAT

The protection Hurricane Katrina victim Julie Martin and hundreds of other Mississippians have had from foreclosures on their homes is about to end.

Martin's historic home in Bay St. Louis, built in 1787 and known as the Old Spanish Customs House, was destroyed by Katrina.

Martin's insurer paid her $248,000. Her lender wants the entire $560,000 mortgage repaid.

But because of a 1980 Mississippi law that allows courts to delay foreclosures for up to two years after a state disaster is declared, she's been able to keep her property.

That law, which requires landowners to pay a reasonable "carrying charge" rather than the full mortgage payment, will expire Oct. 4, making Martin and thousands of other Mississippians vulnerable to home and business foreclosures.

"I want to pay the mortgage, I want to do the right thing, but I need a little bit of help, a little bit more time," Martin, 52, said.

Jeremy Eisler of the Mississippi Center for Legal Services said the moratorium's expiration will result in a rash of foreclosures in the state. Foreclosures and delinquencies have already increased sharply in Mississippi as a result of a nationwide housing crisis fueled by raising interest rates on subprime mortgages.

"I think we are going to see an enormous spike in the foreclosure rate," Eisler said.

But Rep. Gene Taylor, D-4th District, who represents many Katrina victims on the coast, said the end of the foreclosure moratorium might have little impact.

"I don't know of a single lending institution that is on record as saying 'we're not ready to help people out,'" he said.

Mac Deaver, president of the Mississippi Bankers Association, said local banks won't be eager to foreclose on the homes of Katrina victims because they have a vested interest in the health of the local economy.

But he said he could not predict what out-of-state lenders would do. He said it's likely there will be an increase in foreclosures, but they won't occur immediately because the process takes time.

"I don't think there's going to be a boom on Oct. 5," Deaver said.

John Allison, commissioner of the Mississippi Department of Banking and Consumer Finance, said he's unsure what the full impact of the moratorium's end will be.

"I'm afraid there will be some foreclosures because there are some past dues," he said. "It's a waiting game to see what's really going to happen."

The Mortgage Bankers Association said the delinquency rate has risen sharply across the nation this year. In the second quarter, which ended June 30, more than 5 percent of the mortgages in the nation were delinquent, or at least 30 days past due. That rate was almost double for Mississippi, which led the nation in delinquencies with a rate of 9.33 percent.

Many of the delinquencies in Mississippi can be attributed to the problems Katrina victims have faced trying to recover from the storm.

Martin, who once ran a historic restoration business out of her home, now lives in a Federal Emergency Management Agency trailer at Stennis International Airport. She said she is beginning to restore her business and property. She hopes her efforts to recover and ability to pay her mortgage will improve when she receives a community development homeowner's grant.

But she said mortgage companies don't understand the slow pace of recovery.

"We're still all shell shocked," Martin said. "I keep reminding (my mortgage company) I'm not a deadbeat."

 

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