Tuesday, March 11, 2014
By Michael Shepherd email@example.com
WINSLOW -- The Choates' home on Bassett Road has been foreclosed on before.
Shari Gregory, a neighbor, said in her 16 years living on the road, there have been four owners.
The neighborhood is desirable, Gregory said. If the Choates lost their home to foreclosure, she said, another family would likely move in.
If you ask Barbara Fields, the New England regional administrator for the United States Department of Housing and Urban Development, foreclosure is a problem communities need to take on -- and be nervous about.
"If they are to lose their home, it affects their neighbors," she said. "It affects the communities we live in."
Gregory, who called herself a liberal Democrat, said though the government can't bail out all homeowners who overextend themselves, those in trouble need aid.
"I can understand it's hard in this economy," she said. "Yeah, they deserve some help."
A quiet rural road not far from Carter Memorial Drive, Bassett Road is a mix of mobile homes, modest one-story homes, large, brand-new homes and older farms.
Like so many back roads in Kennebec County, pieces of Bassett Road are densely populated -- but the narrow road dips over hills, often tapering into views of fields, acre upon acre.
"People (from outside the neighborhood) actually park their cars on the end of the road and walk their dogs here," Gregory said.
The other day, Gregory said she saw a man walking three goats past her house.
The Choates' house has a three-story silo built onto the front of it. It's big and notable, yet modest.
Assessment records show it sits on nearly 10.5 acres of land, and the town values it at $169,000.
On the surface, it's a scene of rural domestic stability.
Loans for all
Before the housing bubble burst, home prices in the nation were rising dramatically -- fueling demand for larger loans, even for borrowers with shaky credit.
Housing market watchers identify two waves of foreclosures -- the one that set off the market bust from 2006 to 2009; and one that lingers now in a fitful economic recovery.
"The first wave in this country was due to predatory lending," Fields said. "The current situation -- we're looking at people who, through no fault of their own, have extended periods of unemployment."
The vehicle for most predatory lending was the adjustable rate loan, typically given to borrowers with low credit scores.
With such loans, the interest rate either floats based on an interest rate index, or automatically resets higher after certain time periods.
Such loans made up 20 percent of the mortgage market in 2006, according to a 2007 National Public Radio report, with 80 percent of subprime borrowers opting for such mortgages.
The Choates went with a lender called Achieva Home Loans Inc.
Achieva representatives told the Choates in May 2006 they were eligible for an adjustable rate loan with a 9.25 interest rate for the first two years, with no money down.
Because they were buying a house for less than appraised market value, the representative said they would be eligible for a 30-year fixed loan, dropping the interest rate to 3.5 percent after a year, because of the equity in the home.
"The reason I fell for it, I guess, was he said because I paid so much less than what the house was worth, that we would have enough equity in our house to qualify for a lower interest rate," Lynne Choate said.
That loan, with easing terms, never materialized.
Instead, rates went up.
"This is a common mortgage scheme -- or it was at that time," said Casey Bromberg, the local mortgage-aid administrator for the Kennebec Valley Community Action Program. "You wouldn't have enough equity in your home at that time. But someone working outside this industry wouldn't know that."
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