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US foreclosure filings are up 36%, Michigan is in the top 3

Here's what to do if you're facing foreclosure
Posted at 11:15 PM, Feb 10, 2023

FARMINGTON HILLS, Mich. (WXYZ) — Data from ATTOM's January 2023 U.S. Foreclosure Market Report shows foreclosure filings across the country are up 36% from a year ago.

Among the states with the highest foreclosure filings? Michigan.

Michigan ranks third in the nation behind Delaware and Illinois.

John Kallabat, bankruptcy attorney at Kallabat & Associates told 7 Action News, "I’ve been doing this for about 28, 29 years, and this is about the most I’ve seen, all at once happening."

Kallabat said his office is seeing a huge influx of people coming in desperate because they're facing foreclosure.

"I can only speak to the bankruptcies and seeing the rise, the calls, and the desperation of people," said Kallabat. "On Monday I had someone come who had a foreclosure Tuesday morning, and yesterday I had someone come who has a foreclosure tomorrow morning."

One of those people is "Rob" from Eastpointe.

We're not revealing his real name as he did not feel comfortable having that aired or his face shown.

Rob shared with us he's self-employed and has a business that requires him to go inside of peoples' homes, something he was unable to do when COVID caused shutdowns in 2020.

"75% of my work was inside peoples’ homes. 90% of people didn’t want you in their homes!" said Rob. "It just left me in a bind so I had to shuffle and scuffle here and there and it never met up to what I needed to take care of."

Rob said his bills started to pile up, and even now that his business is picking up again he says inflation and higher interest rates are making it extremely difficult to pay off his accumulated bills.

In the last year, he knew what he was going to have to face, foreclosure.

Rob shared that the dread of it was terrible, saying, "I would think, 'Should I go to sleep, or should I try to go to sleep? Do I eat in the morning, or can I eat in the morning?' It's that gut feeling."

Rob is far from alone.

According to data from ATTOM, one in every 2,617 Michigan housing units had a foreclosure filing in January.

One out of every 1,575 housing units had a filing in Detroit.

Both the state and city of Detroit are within the top five in their categories for the most foreclosure filings in the country.

When asked why Michigan and Detroit seem to be suffering worse than other areas, ATTOM CEO Rob Barber said in a statement:

"Two key reasons Detroit has one of the highest foreclosure rates in the nation are likely income and employment, with homeowner equity also a possible factor.

The Detroit metro area remains among the poorer ones in the nation, with a median household income of about $67,200, according to the U.S. Census Bureau. Detroit's median household income is considerably lower, at about $34,800.

And while the Detroit metro area unemployment rate has dropped dramatically - from 24 percent during the worst of the Coronavirus pandemic in 2020, to 3.3 percent in December in 2022, the legacy of those virus-related woes probably continues to linger and affect the resources homeowners have to keep up with mortgage payments. That would be especially true in Detroit, where the latest jobless rate still stands at 7 percent.

With less money to start with and the pandemic fallout likely still hurting lots of homeowners, it's not surprising that the portion of homeowners facing possible foreclosure in the Detroit area remains high.

At the same time, one of every 12 mortgages in Detroit was seriously underwater in Q4 2022, meaning that homeowners owed at least 125 percent of the estimated value of their homes. That was way above the national rate of one in 34. That higher rate could be prompting more homeowners behind on their mortgages to throw in the towel and let their lenders foreclose."

Kallabat said normally he recommends people fearing foreclosure speak to their mortgage company about alternative payment options, but, "The problem that we’re seeing now is that people are saying even if I can work with them (mortgage agencies). I just can’t pay this anymore, inflation has caused a lot of this. People are coming in saying, 'I can’t afford to buy gas and food and still pay my mortgage."

Kallabat recommends if you are fearing foreclosure, first get ahead of it by calling an attorney so you can maximize your options and avoid fees.

Second, consider selling your home and downsizing.

Third, consider filing bankruptcy.

"At the end of the day a lot of them end up needing to file for bankruptcy and they call us to file bankruptcies for them," said Kallabat.

That's what Rob did, filing bankruptcy halts a foreclosure so he cant stay in his house.

For many people it ultimately helps them reach a better payment plan and get their credit back up.

"After I came in yesterday, it was like a weight off me," said Rob. "The problem's not over, but I felt a lot better."

Kallabat said, "For most of these people it’s going to improve their situation."

It's a scary time for many people facing foreclosure, but Kallabat says if you get ahead of it, the options are there for you.

"And also it teaches you a lot," said Rob. "It teaches you to put what they call ‘something on the side for a rainy day’. Because you’re going to need it."

Kallabat said whether foreclosure filings continue to rise depends on the economy, but him and fellow bankruptcy attorneys expect them to continue going up.