In some ways, Ohio has become a poster child for the problems and an example of a state now searching for solutions. In 2005, one in every 71 households filed for bankruptcy or had their mortgages foreclosed, says Gov. Ted Strickland (D) in a phone interview. "That problem has worsened in the last few months to the point it is a crisis in Ohio…. I have been told for every vacant home in a neighborhood, property values decline by 1 percent."
Governor Strickland says part of the problem is the "relatively flat" manufacturing economy. But, he adds, the state has also suffered from "predatory lenders that have taken advantage of folks in unscrupulous ways."
Last month, Strickland formed a foreclosure task force made up of public officials, lenders, and nonprofits. "We want to look at the total picture and devise solutions for the state to minimize the pain that's being felt out there," he says.
One of the state's solutions is for the Ohio Housing Finance Agency to issue $100 million in taxable bonds. The proceeds will finance fixed-rate mortgages for people who may be on the edge of foreclosure.
On Monday, the agency began taking applications, receiving close to 300 calls on that day alone.
"There was a lot of distress in the voices," says Rita Parise, program director. "Some we may be able to help, but numerous people were well into the foreclosure process, and we will not be able to help them."
Initially, the agency is estimating the new pool of money will provide refinancing for about 1,000 mortgages. "If the demand is there, we will go back in the market again and again," says Doug Garver, the agency's executive director.
While the financing could help, some Ohio officials believe even more urgent action is needed. In fact, Monday was the deadline for Cuyahoga County (Cleveland) residents to ask for property-value readjustments. Officials are expecting 50,000 homeowners, about 10 percent of the city's residents, to ask for downward revisions of their taxes.
Cuyahoga County Treasurer Jim Rokakis says communities need to work together with the mortgage service companies to head off more foreclosures. "I don't care if you want to call it a moratorium, or a cooling-off period. But for this to be most effective, we have to find a way to get them to agree to back off on adjustable-rate mortgage interest [hikes], and back off on foreclosures."