Are you among those who have not been affected by the ongoing housing crisis? Well, lucky enough not to go through the mess but you still might be indirectly affected by this whole mess. This foreclosure is causing a ripple effect affecting the value of your home too.Butler County has 2000 homes that have been foreclosed in the past three years. They have been ignored as their value is very low, but now the county’s auditor warns that this should not be ignored.

A foreclosure sale from the sheriff’s office in Liberty Township’s Falling Waters area, the bidding would start at $230,000 while the home’s appraised value is actually $345,000. People living in the neighborhood worry that its not just homes facing the fury. People are selling homes much lower than the original prices purchased at.

Jeff Englund, resident of Liberty Township states that the trend is catching on where people are taking losses worth $50,000 in a mere 6 month to 12 month time period and this is causing worry to those staying there for a long time and have purchased properties long before.

While appraising homes, the formula used by the state auditor does not factor in for the number of foreclosed homes in the neighborhood sold by the banks after the commencement of the sheriff’s sale. Auditor Kay Rogers of Butler County says that one would get a true reflection of the neighborhood’s value after inclusion of such foreclosed homes. The state permitted Rogers to include this factor into her calculations while appraising homes.

Rogers also warns that no matter what the appraised value would be, taxes levied will be as per norms as the collections amount to millions of dollars and that they have to collect them. It is her advice that people should not believe that a lower appraisal would mean a lower tax bill!

Auditors believe that the only way to get a lower tax bill is when there are enough homes in the living community or school district, which has a higher value than that of the homeowners’ lower appraisal. They also say that it is too early to comment on what the consequences might be and how actually people would be affected.

Rogers says that the state is allowing her to tread on thin ice with the implementation of this new suggestion in Butler County and then see the results, which should not be a problem to her.

Homeowners would be getting a statement in their mail within the months of May and June stating the value as per the new appraisal norms. Moreover, that she is already expecting to receive a lot of complaints and anxious calls from her county residents.

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Sticking with more traditional banking practices while institutions in other parts of the nation tried riskier loans has helped southern West Virginia and Southwest Virginia avoid the rash of mortgage foreclosures dampening America’s economy, area loan officers said.

In 2007, investors who financed new homes by getting subprime mortgages with adjustable interest rates began to have problems making their monthly payments when the interest rates on them increased. Since then, the foreclosure issue has been the focus of many debates and economic forums. With interest rates at their peak, things were not looking too rosy for home owners in the long run.

Mike Day, a loan officer with MCNB Banks, said consumers with such loans might have signed up thinking they would always be paying $400 on their mortgages each month, only to see these payments jump to $650 a month. Such increases can tighten family budgets and lead for foreclosures.

“On top of that, gasoline prices are on the rise and natural gas prices keep rising. Everything is on the rise,” Day said. “It’s a tough world to be in financially now.”

However, Day and representatives of other banks in the region said they have not seen an increase of home foreclosures.

“Really we haven’t seen any, mainly because we don’t deal in those loan packages,” said Collection’s Manager Lawrence Reed of the Bank of Tazewell County. “We’re still a little more conservative. Past conservative products carry you through the tough times.”

Hal Absher, director of secondary mortgage lending for First Century Bank, said staying away from subprime loans may have looked “dumb” once, but now it’s proven to be a “smart” move.

“We’ve been a conservative lender,” Absher said. “We haven’t had subprime loans, so we haven’t seen the spike in foreclosures, thank goodness.”

One vision area bankers keep in mind is the Sept. 1, 1999 collapse of the First National Bank of Keystone in McDowell County, one of the biggest financial failures since the Great Depression. It is an example of what can happen when financial institutions use questionable practices, Reed said.

“When local banks start thinking there’s a get rich quick scheme out there, somebody gets burned,” he said.

All in all, this is one of those parts of the country that has been fortunate enough to not be too dramatically affected by foreclosures. Unless interest rates come down, the threat of foreclosures increasing will continue.

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