The rate of foreclosure in Hamilton County has reached its skyrocket. It is the wealthiest county of Indiana. Nearly 1,400 properties in the real estate of this county have been foreclosed till date this year. It has risen sharply from what it was a year back. The number of foreclosure throughout 2007 stood at 971. A total of 200 foreclosures have been reported in Hamilton County in the month of October.

In Marion County, a total number of 1,890 were foreclosed last month. One out of every 478 households in Hamilton County is in some state of foreclosure. On the other hand, one out of every 220 households in Marion County is in some stage of foreclosure.

Executive director of Noblesville Housing Authority Troy Halsell said, "The numbers we’re seeing aren’t going to stop; they’re almost certainly going to increase," It is quite tough to tell about the total number of people defaulting on their mortgage payment. The areas that have been mostly affected by the problem of foreclosure are Fishers, Noblesville, and Carmel that came up in the past 10 years. The homeowners in these regions borrowed money at a time that was beyond their affordability.

Halsell said, "They might be undereducated in terms of home buying and maybe overzealous in wanting a particular house and an accommodating lender or broker wants to get them in there whether it’s in the buyer’s best interest or not. Although loan brokers are obligated to put the buyer in the best loan they can find, oftentimes brokers are putting them into loans where (the broker) can make the most money off of it."

Hamilton County has received $2.3 million fund for fighting foreclosure from the federal government. However, there are many people who have not been able to qualify for that money. A major part of it has been reserved for assisting during down payment and renovation of foreclosed properties for the people looking towards buying a foreclosed property. Cheryl Garner, who deals with foreclosures of Sheriff’s Office in Hamilton County, said, "There’s a myriad of issues for most of the people. If both people are working they can afford the house, but if one gets laid off or sick, it can cause a spiral that’s hard to dig out."

Garner further said that it is not only the families having lower income who are facing the problem of making their mortgage payment. Also, the middle class income group is facing the same problem in the real estate area of Hamilton County.

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In Indianapolis real estate, about 40 percent of mortgage brokerages have lost their licenses. These mortgage brokerages have failed to comply with a newly introduced law that has been aimed at elevating the industry standards in Indianapolis having one of the highest foreclosure rates in the nation. This is a 2007 industry-backed law that states that each of the brokerage has to name a principal broker who has been through a state exam besides 3 years of experience. This principal broker is also required to look after the business matters of his company.

But about 361 of the 950 mortgage brokerages in Indianapolis have flunked to go by this law. About half of the 950 brokerages in Indianapolis who has been licensed by the state July 1 have been able to stay in the business. They are out of the new law till January 1, 2009.

As said by Todd Rokita, Indiana Secretary of State, nearly about 143 mortgage brokerages have given up their licenses on their own. Some have declined to open up their mouth when they were contacted over the phone. Many have even disconnected their telephone lines. This 2007 industry-backed law besides requiring the background checks on brokers has also increased their annual fees from $400 from $100.

Jim Gavin, a spokesman for Todd Rokita has said that there can be a change in the number of revocations and license forfeitures in the near future. Todd Rokita has said that the real estate brokers play the role of third parties between the borrower and lender. He has even stated, “Some businesses said, ‘I don’t even want to invest another $300 in this enterprise,”.

According to President Mike Monaco of Merrillville, The Indiana Association of Mortgage Brokers along with the lawmakers and help from Todd Rokita has drafted the new law. The state Securities Division’s investigators have been trying to find out whether there were any more unlicensed loan brokers in the state or not. Rokita has said that an unlicensed loan brokers can face civil penalties or can be charged with a criminal offence even.

He has even called up the mortgage lenders to provide secret information to the investigators if they knew any of the unlicensed loan brokers still running their business.

According to President Mike Monaco, the low standards are undoubtedly one of the reasons behind Indianapolis being arrested with one of the highest foreclosure rates in the nation.

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Marvin Davis and his wife who now lives in a mobile house in Anderson, was a resident of a home on 55th Street, just a few blocks from their present house. This 64 year old man lost his old house due to foreclosures about 5 years ago. Today, he has to depend heavily on his children for financial help. Although several years have passed by, but even today when he and his wife go by their old house, the overgrown weeds simply make them sad and nostalgic. He bought this home 20 years ago. He was then working at Delco Remy and enjoyed a very sound financial status. But his sudden heart attack in 1999 changed everything. Just when he retired after a year, his salary became almost half that had a negative effect on his home payment. The heavy medical expenses were an added blow. All this forced him to leave his old home. He is one of those victims of real estate foreclosures that have today made thousands homeless across the nation.

Marvin Davis said that he failed to restore his home as General Motors continued to cut benefits for employees that increased his co-payments on medications. He has put the blame of his home loss on the job outsourcing and avaricious corporation. He has even blamed the government for hikes in the property tax that has led to the increase in tax bill tremendously.

As per the executive officer of the Anderson Madison County Association of Realtors, Patty Kuhn, it is the various practices of the bank that are to be blamed. He said, “There were many programs out there that allowed people to buy homes with no money with seller assistance and that’s come back to haunt us.” According to her, there are a large number of reasons behind real estate foreclosures, one being unemployment. Another thing that leads to loss of home is divorce where people fail to afford their homes. Kuhn said that the homeowners are required to show reserve money so that they can continue home payments in case something affects their income.

The Madison County has reported about 1,000 homes in foreclosure situation. A foreclosure tracking company named Realtytrac has put forward that there has been about 53 percent rise in real estate foreclosures this June from June 2007. The reasons that have been ascribed for this situation are poor economy, predatory lending practices, and adjustable rate mortgages.

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Some 500,000 broke homeowners may be able to avoid foreclosures with the real estate housing legislation, which can soon become a law and help them refinance into government-backed mortgages that are more affordable. As several borrowers may not be able to qualify, those facing foreclosure should acquaint themselves with two alternatives – transactions related to ‘deed in lieu of foreclosure’ and ‘short sales’. None of the choices can help you from losing your home, but they can be less painful than foreclosure in the legal process of banks involved to repossess a homeowner’s property.

In case of a short sale, the borrower tries to sell the home at a reasonable real estate market value, which is less than the sum owed on the mortgage. The lender generally contends to forgive the remaining part of the debt. In case of the other option, the borrower passes the home to the lender with his permission ‘in lieu of’ waiting for the foreclosure. It is the lender’s duty to sell the house and he forgives the figure by which the mortgage balance surpasses the home’s current value.

According to an associate vice president of the Mortgage Bankers Association, Vicki Vidal, both strategies offer a legal and psychological relief as most people can move from their home without the burden of mortgage debt. Compared to this lenders can demand the differential figure owed to them in foreclosure proceedings. Although many lenders do not go after this debt, but it has happened especially in certain cases in which the borrower destroyed the property while leaving. Deeds in lieu of foreclosure and short sales have another benefit, which is borrowers have to face a briefer waiting period, prior to obtaining another mortgage.

These two options minimize the impact, which a borrower’s credit score receives. The spokesperson for Fair Isaac Corp, Mr. Craig Watts said that all the proceedings related to foreclosure, short sale and deed in lieu of foreclosure have a more or less similar negative impact on a person’s credit score. According to him, there has not been much analysis to distinguish the credit risk associated with people who finished a short sale and those who were involved in a foreclosure. As a result, “the model ends up treating them all the same.”

For both deeds in lieu of foreclosure and short sales, borrowers need to produce a ‘hardship letter’ to the lender, providing a detail of the reasons for which they were not able to make the mortgage payments. In the real estate market, lenders prefer short sales to the other options.

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