rate in Ripley County soars
Cindy DiFazio, Staff Writer
Up until the late 1990s, the foreclosure rate
in Indiana was below the national rate. However, since 2000 the
number of foreclosures in the Hoosier state has climbed precipitously,
attaining the dubious distinction of the highest foreclosure rate
in the country in 2002. At that time, Indiana posted a 2.38% average
while the national number was less than half that at 1.15%.
In Ripley County the numbers have risen steadily as well. In 2002,
the year that Indiana topped the country in foreclosures, Ripley
County had 71. In 2005, the total was 87 and in 2006 a staggering
Why is this happening? One thing that bears looking at is population.
According to 2000 IRS tax returns, 59,621 households moved out of
Indiana while only 55,324 moved in, yielding a loss of about 4,000
households. This trend has continued over the last several years.
This points out something that is talked about at length here in
Ripley County. How do we keep our young people in the area when
they start looking for careers, and how can we attract new families?
The answer, of course, is economic development, excellent schools,
and jobs, jobs, jobs.
The cause and effect of the leap in foreclosures is multi-faceted.
There was a big loss of jobs early in the decade. In 2003, state
payroll decreased by more than 4%. Add to that Indianas high
percentage of manufacturing employment, which had also slumped,
and a lot of families start losing their homes. As a matter of fact,
the Indiana Business Review wrote that between 2000 and 2002, Indiana
lost more jobs than any other state in the country.
Another factor, that on the surface looks like a good thing, is
that Indiana has one of the highest home ownership rates in the
country. The problem is that when mortgage rates allowed for higher
home ownership there might have been excess loans approved for marginal
homebuyers who were susceptible to losing their homes when the job
market hit the skids.
Some good news is that it does not appear that Indiana has a problem
with predatory lenders. According to Mortgage Area Research Institute,
Indiana ranked in the lowest level for the category of predatory
In Indiana, the number of FHA borrowers played a role in foreclosures.
FHA produces a large number of loans for first-time homebuyers (statistically
more likely to default) with a low down payment and a higher monthly
payment than conventional loans. Mortgage Bankers data shows that
FHA loans are nearly five times as likely to foreclose than conventional
loans. In 2000, 25% of Indiana borrowers had loans through FHA,
a significantly higher percentage than the national average of 17%.
Finally, the rate of appreciation of Indiana residential real estate
is lower than other states, a problem in many midwestern states.
What this means, according to the Indiana Mortgage Bankers Association,
is that a borrower with little or no down payment needs more time
to establish an equity cushion if financial difficulties arise.
There are many resources to utilize when in the market for a home.
For lower-income and special needs borrowers in rural areas, Rural
Development offers many programs and good information. They have
an office in Versailles located at 1981 Industrial Park Road, Suite
4. Their phone number is (812) 689-4224. Another first-time homebuyer
resource is Fannie Mae located at fanniemae.com.