Foreclosure rate in Ripley County soars

Cindy DiFazio, Staff Writer

Up until the late 1990’s, 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 109.
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 Indiana’s 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 lending.

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