Public Affairs Journalism Article One - Foreclosures in Asheville

By Patrick Zarcone

Of North Carolina’s 100 counties, only 13 experienced more home foreclosures than Buncombe County in 2009, according to statistics provided by the Administrative Office of the Courts.

There were 1,174 home foreclosures in Buncombe County from January 2009 through December 2009, a 41 percent increase from 2008, when Buncombe County saw 833 home foreclosures, according to the AOC.

“Because housing prices were rising, there were folks who would start buying houses in anticipation of them rising higher, and this actually contributed to prices rising further because it placed a demand on housing,” said Robert Tatum, associate professor of economics at UNC Asheville. “They were buying so they could turn around and sell it at a higher price,” he said. “So when housing prices finally fell, this put people in a lot of bad situations because a lot of folks had high loan-to-values.”

The state experienced a 17 percent increase in foreclosures from 2008 to 2009 for a total of 63,341.

Rising home sales and the sudden plunge the housing market took caused the current crisis, according to Tatum.

With the economy in a downturn, foreclosures have only become more common.

“The economy slowing down in and of itself caused unemployment, so that put people in another situation that would make it kind of hard for them to pay for their loans,” Tatum said. “It’s just that housing prices were rising and people didn’t think they’d actually ever fall, and it led to a lot of these consequences.”

For residents in some of North Carolina’s westernmost counties, there are at least two organizations that are ready and willing to help those who find themselves in a situation where they might lose their home.

Pisgah Legal Services has a presence in the foreclosure protection field in Buncombe County and other counties in the western part of the state.

“Pisgah Legal is a not-for-profit organization (that) offers free legal services for the low-income population here in Western North Carolina,” said Pablo Averza, a legal screener at Pisgah Legal Services in Asheville. “We serve seven counties, but our services are not limited to those seven counties because we have several programs that help more counties, almost 15 in total.”

Averza, who is working on his fourth year at Pisgah Legal, is the person who interviews nearly every person that calls Pisgah Legal for help with anything ranging from legal representation in a domestic violence case to issues with banks or lenders in home foreclosure cases.

“One of the (issues) we help with is people under distress due to the foreclosure situation, and we have a team of two attorneys here that help with those matters,” Averza said. “We have a staff of 16 attorneys and we also have a network of 300 attorneys that help us in a pro-bono fashion.”

According to literature available at their office, Pisgah Legal and their full-time staff and network of attorneys generated approximately $27 million in quantifiable benefits to their clients in 2008 on only a budget of $2.2 million, all of which came through donations from people, businesses and corporations.

The numbers for 2009 won’t be available for another few weeks, but they should be even greater than the numbers for 2008, according to Averza.

“We saw an increase of requests in all of our services last year, and I believe there was probably 20 to 25 percent (increase) than we used to receive before and in terms of foreclosures there was a big escalation,” he said.

While Pisgah Legal does represent clients in home foreclosure cases, they’re only able to represent those who have legitimate legal claims that can be defended in court. For cases without legal claims, there is another organization in Buncombe County that can help.

OnTrack Financial Education & Counseling is another local nonprofit organization that is seeing firsthand the impact the foreclosure crisis is having on Western North Carolinians.

“We’re a non-profit financial counseling agency and people come to us because they’re having difficulties and struggles in one part of their financial lives or another, so we help people get out of debt and learn to live debt free,” said Thomas Luzon, director of counseling at OnTrack.

OnTrack provides services ranging from helping with student loan defaults to improving landlord-renter relationships to foreclosure prevention. They serve the 18 westernmost counties in North Carolina and rely on grants in order to fund some of their programs.

Their foreclosure prevention services are one of their most popular and also the most in-depth that they provide.

“They come in for help because they want to keep their house. Most of the time there has been a reduction in income usually due to a job layoff in these days and they’d like to keep their house, but you know, lenders are difficult to work with,” Luzon said. “What people don’t really understand what options they may have available to them, so that’s the most intensive service that we provide.”

Providing a service is one thing, but providing a service well is something entirely different. According to the statistics provided by Luzon, OnTrack does their job well.

“In 2008, we opened 511 cases and lost four and in 2009 we opened 834 cases and lost seven,” he said.

That’s a 99.2 percent success rate for both 2008 and 2009. Continued success will be important.

“North Carolina and us are expecting (the number of foreclosures) to increase in the neighborhood of about 50 percent,” he said.

That would put the number at more than 1,200 new foreclosure cases by the end of this year.

The only problem with these foreclosure numbers is that they don’t necessarily tell the real story, Luzon said.

“When the foreclosure crisis started, the media and everything all really zeroed in on foreclosures and the thing is, that’s the aftermath, you know? The horse is already out of the barn so why worry about the door? It’s really the defaults that are the key.”

Defaults, in terms of foreclosures and in the simplest terms, are when a person is behind on their mortgage payments to the bank or the lender. Defaults, as a statistic, can be a good indicator of what’s to come in terms of the number of foreclosures ahead, Luzon said.

“According to the Mortgage Bankers Association in January the number of people who were 60 days late on their mortgage was double that of January of ’09,” Luzon said. “That’s always the precursor.”

Another important and overlooked aspect of home foreclosures is the impact it has on the community as a whole when it comes to home equity.

“You could own your home free and clear and say to yourself, ‘you know, I really feel bad about the foreclosure crisis but I own my house free and clear, so I’m immune to it, I don’t have to worry about,’” he said. “But if I live across the street from you and I get foreclosed on, that affects you.”

Because so many people don’t understand their mortgages or how foreclosures work, people don’t respond as they should when they do actually get foreclosed.

“The one thing on the part of people where they’re hurting themselves when it comes to the foreclosure crisis is they wait too long to come see us,” Luzon said.

Foreclosure prevention is such an important issue that OnTrack actually provides a service for those who aren’t even in default yet, he said.

“We do a lot of outreach and we even have a service called pre-mortgage default, and that’s for people who are current on their mortgage but are afraid they might become delinquent in a month or two, and that’s when we like to get them. That’s the best time to get them.”

“But there’s a lot more options in the beginning than there are at the end,” he added.