“NOT EVERYONE SHOULD OWN A HOME — JUST THOSE WHO CAN AFFORD IT.”

Marc A. Stefanski, CEO of Third Federal Savings & Loan in Cleveland, Ohio, quoted in “Can the Mortgage Crisis Swallow a Town”, New York Times, Published September 2nd, 2007.

He’s right. Exactly right. That is a hard say, but it must be said. But in the housing and cheap credit binge of the last few years, it was a forgotten homily.

CAN THE MORTGATE CRISIS SWALLOW A TOWN? OR A STATE? OR AN ECONOMY?

The Times’ article explores Maple Heights, Ohio, a suburb of Cleveland, Ohio. And the risk that the foreclosure business may become a national franchise.

Indeed, what was once a problem confined mostly to economically struggling areas is quickly becoming a national phenomenon. Last year, there were 1.2 million foreclosure filings in the United States, up 42 percent from 2005, according to RealtyTrac, a firm that analyzes such data. At current rates so far this year, RealtyTrac expects foreclosure filings to hit two million in 2007, or roughly one per 62 American households — a rate approaching heights not seen since the Great Depression.

Analysts also say that the fallout from mortgages gone bad is spreading well beyond borrowers now in default. It has begun to engulf middle-class communities like Maple Heights, where nearly 10 percent of the houses — or 910 properties — have been seized by banks in the last two years. And it foreshadows what could lie in store if mortgage holders default on what the Federal Reserve conservatively estimates to be $100 billion in risky subprime loans. Many of these loans were made in 2005 and early 2006, when standards were at their most lax and cities like this were blanketed with aggressive pitches from mortgage providers.

BUT SOME CITIES AND HOUSING MARKETS HAVE AVOIDED THE SHERIFF’S SALE SHUFFLE.

WHY has the impact of the subprime meltdown been so much more severe in communities like Maple Heights than in other parts of the country? Mr. Rokakis suggests that it is a combination of Cleveland’s underlying economic problems and a lack of the steadily appreciating housing prices that other areas enjoyed. That shut off a crucial safety valve — in other regions, overwhelmed borrowers could often turn around and sell their homes for at least a slight profit.

In Maple Heights, the situation is now reversed: with so many properties on the market, home values are dropping, and some delinquent mortgage holders owe more than their homes could now fetch in a sale. “The tax base is eroding,” says Mr. Ciaravino, the mayor. He warns that property values may soon have to be reassessed downward, further crimping tax revenue and raising the heat on Maple Heights’ remaining property owners. “This has affected virtually every aspect of community life, like increasing the rate of transient students in the schools,” he says.

If, as the article states, that lame local economies and stagnant housing prices can combine to exacerbate a local slide, then neighboring states such as Michigan and Indiana (the Author’s home state) face risks similar to Ohio and Maple Heights.

NO DOWN PAYMENT? NO CREDIT HISTORY? NO PROBLEM. JUST NO LOAN IN THE DESERT OF THE REAL!