Killing The Last Zombies of the Foreclosure Apocalypse

The real estate market in Atlanta has been booming, again … he writes, fearful of jinxing things. We’re at a point where we’re worrying about gentrification — and if you’ve got pedestrian-level advertising for plastic surgery shops along the Beltline, I’d say they’re valid.

But wide swaths of metro Atlanta are still hanging on by their fingernails. Houses in south DeKalb are still selling — not as foreclosures, mind — for $80,000 and $70,000 and $60,000 a pop. A lot of that has to do with the remains of the foreclosure crisis, which is still pushing home values down.

Georgia just received $110 million from the federal government to bring as many mortgages as they can up to even with valuations. Much of that money is slated for south DeKalb and south Fulton counties. And it’s going to be a scramble.

The Underwater Georgia program will give homeowners up to $50,000 each to pull their mortgages above water. The Department of Community Affairs sent letters to about 50,000 households, alerting them to the funding and setting an application deadline of October 18. But the program probably won’t be able to fund more than 3,000 homeowners.

I fear some people will see the letter and treat it like junk mail. It’s real, and it’s significant.

It may come down to which community is wired to learn about an opportunity like this fast enough to take it. The city of Atlanta has political infrastructure that DeKalb County lacks. Word will spread their faster, which means more of the money may end up there instead of south Fulton or south DeKalb.

The program will contribute to the mortgage of a primary residential home bought before 2012, with less than $250,000 on the note, that’s at least 10 percent underwater. You have to be no more than 90 days delinquent, not in active bankruptcy, and current on your taxes. You also can’t earn more than $95,480 a year, and you have to have less than $50,000 in liquid assets.

I’m particularly concerned about my corner of the world, in south DeKalb County. The foreclosure crisis hit here first and worst, and it’s not really over. Low home valuations have killed DeKalb’s tax base, which creates all kinds of knock-on economic problems like blighted abandoned property and high tax rates that disincentivize business. This is part of the solution.

I’m not convinced that there isn’t more to the home valuation issues in south DeKalb. The Washington Post took a look at things earlier this year, citing the work of the South DeKalb Improvement Association. I think it is possible that banks still feel burned by the serious mortgage fraud problems in DeKalb, and have been compensating by being over-cautious about accepting appraisals that show rapid home appreciation. Artificially-low appraisals are a soft form of bank redlining. If it’s happening, it’s taken millions out of the pockets of hard-working middle class African American homeowners. But we don’t yet have the data to make this case in court.

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