Foreclosure Michigan Home's Story Follows Foreclosure Process
The
former home of Joan Cyman is seen in Rochester Hills, Mich. on Oct. 4, 2007. At
14, Cyman hauled wood and clutched a hammer with her father to build a deck on
the back of their house. At 41, Cyman is trying to put her life back together
after losing the home to foreclosure in 2006. Now a long-vacant eyesore with a
patchy, overgrown lawn and torn auction sign in front, the Rochester Hills
residence has a buyer. (AP Photo/Carlos Osorio)
By JEFF KAROUB – found at AP
ROCHESTER HILLS, Michigan. — At 14, Joan Cyman hauled wood and
clutched a hammer with her father to build a deck on the back of their house.
It was one of many projects to turn the already attractive four-bedroom,
three bathroom suburban house into a home. She was 12 in 1976 when they left a
rough neighborhood in Detroit to be among the first families on the cul-de-sac
in the gleaming new subdivision.
"It was like a family home," she said. "I felt like it was
left to me and should have stayed there the rest of my life."
It didn't.
Joan Cyman faces foreclosure in Michigan
At 41, Cyman is 145 miles north in rural Roscommon County, trying to put her
life back together after losing her home to foreclosure in 2006. Now a
long-vacant eyesore with a patchy, overgrown lawn and torn auction sign in
front, the Rochester Hills residence has a buyer, a businessman whose sideline
buying foreclosed homes has picked up as the housing market has tanked.
"It does present a lot of opportunities," said Mike Smitha, 52, a
local investor who is waiting to close on the property.
"You
have to look at it as a business. It's simple economics: Buy as cheaply as you
can, maximize the money it's going to take to repair and sell it for as much as
the market will bear."Joan Cyman is shown in Midland, Mich. on Oct. 17,
2007. At 14, Cyman hauled wood and clutched a hammer with her father to build a
deck on the back of their house. At 41, Cyman is trying to put her life back
together after losing the home to foreclosure in 2006. Now a long-vacant eyesore
with a patchy, overgrown lawn and torn auction sign in front, the Rochester
Hills residence has a buyer.
The home was one of 700 seeking new life in a recent auction in Michigan,
which had the fourth highest foreclosure rate in the nation in September,
according to Irvine, Calif.-based RealtyTrac Inc. Automotive industry cutbacks
in the state have led to the nation's highest unemployment rate as well as a
declining population.
When people fall on hard times, so too do their homes.
Cyman said money disputes with her husband, from whom she's separated and
divorcing, made it difficult for her to make ends meet. She fell behind on her
mortgage payments, and her lender started the foreclosure process in September
2005 on a $228,650 mortgage she took out nine months earlier.
The colonial-style house at 949 Homestead Court has a purchase agreement for
$136,500 — a "deal of the century" for a home whose value, once
repaired, would be $250,000, said real estate agent Ron Walraven. The home that
once impressed neighbors now is a handyman's special: Walraven estimates it
needs about $40,000 to update an old kitchen, repair damage caused by basement
flooding and perform other major projects.
Like so many other homeowners, Cyman took advantage of lower interest rates
and better terms in the housing bubble in the early part of the decade. In 2002,
after the original $37,500 home mortgage established by her late father was paid
off, she took out the first of three adjustable-rate mortgages to pay large
bills. Two others followed, and she said she was enticed by the lower rates she
was being offered.
"I did (get) caught up — everyone was doing it," she said.
"They'd call me and say, 'I can put you in a seven-year ARM.' The payment
would go down."
Yet her overall household debt rose. Her salary would have covered the
mortgage — which she said was about $800 a month by the time of the final
refinancing — but hers was the only income coming in at the time.
Cyman said she tried to work with her lender, Wells Fargo & Co., on a
plan to catch up on back payments. She said the company was uncooperative and
told her there was nothing it could do.
A Wells Fargo spokesman said he could not comment on Cyman's case, but the
company said in a statement it works hard to keep customers in their homes and
has expanded its efforts to help them. Walraven and other industry observers say
lenders overall have become more involved in preventing foreclosures as the
number has skyrocketed.
"Eighteen months ago, their position was not to easily work it out like
it was today — especially in Detroit, where we have a glut of
properties," Walraven said.
Dan Sugg, president of the Michigan Mortgage Lenders Association, said his
industry recognizes the responsibility it shares in keeping homes out of
foreclosure. Among other things, he said, it's holding foreclosure-prevention
workshops in the hardest-hit areas.
"The bottom line is (a) homeowner agreed to repayment of debt, signed
the note and knew the terms of the mortgage. But we understand that situations
change and that things can become more difficult. That's why the (loan)
servicers are helping the homeowners through the situation."
For Cyman, whose father was a successful area business owner and mother a
longtime member of the local school board, losing the house felt
"emotional" and "degrading." Tadeus Cyman died in 1989; his
wife, Lorraine, in 1992.
"I just feel sorry for the neighbors next door that are dealing with
that house right now," said Joan Cyman, now living in a small cottage she
bought many years ago and running a technical help desk at a community college.
"I've heard it just looks terrible. They haven't done anything to it."
In August 2006, Walraven said he received a $200,000 cash offer for the home
— still not enough to cover what Cyman owed. But that fell through when the
prospective buyer had a family emergency. After another year on the market, he
said, the seller decided to include it in the auction of 700 Michigan homes put
on in September by Texas-based auction firm Hudson & Marshall.
Smitha said the home caught his eye before but he thought it was too
expensive for its condition. When he saw it again in a Hudson & Marshall
flyer and learned the firm was accepting electronic bids, he decided to
"take a little stab."
"They called back and countered," he said. "I turned them down
and figured I'd never hear anything. About four or five days before the auction,
they called me back and said, 'The lender decided to accept your offer.'"
Smitha has been involved in real estate for 30 years as a licensed broker and
agent, and has been a builder for the past 12. He said he has been an investor
all along, but his pace has picked up during the past couple years as the market
has declined.
"It presents some risks but on the other side of the coin in presents
opportunities: The best time to buy is when everyone else thinks you
shouldn't," he said. "The best time to sell is when everyone else
thinks you should buy."
Smitha is among the more than half of auction buyers who are investors, not
owner occupants. He awaits closing on it, then plans to fix it up and sell or
lease it sometime next spring. Still, he said he expects to spend more than
$40,000 to repair and renovate it.
That's an even greater risk in a down market — but he sees much the same
upside that Tadeus and Lorraine Cyman saw 30 years ago, including a nice
neighborhood, solid school district and ample living space.
"There are literally hundreds of these houses on the market in the
Detroit area," he said. "It's sad but obviously I didn't create the
problem. Someone has to buy these and fix them up.
"Really, what people like me do, is return a house to the market in a
livable condition that prior to that most people didn't want to walk
through."
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“There’s so much inventory out there that the buyer can pick and choose,” said Susan Sirles Fidler, a Realtor at Re/Max 10, Oak Lawn. But she cautioned, “The stuff that’s almost free is almost free because it’s going to cost you an arm and a leg to put it back together. It’s not buyer beware as much as buyer be smart.”
