Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, January 20, 1993 TAG: 9301200116
SECTION: CURRENT PAGE: NRV-1 EDITION: NEW RIVER VALLEY
SOURCE: MADELYN ROSENBERG STAFF WRITER
DATELINE: BLACKSBURG LENGTH: Medium
ADVICE TO JOBLESS: MAKE A BUDGET - AND MEET PROBLEM HEAD-ON
Foreclosure rates in Virginia are lower than they are nationwide, but sometimes small pockets of people may lose their homes to the bank, especially in areas where economic depression runs deep.That depression can be spurred by plant closings or, in some cases, large layoffs.
Today, 730 people will go to their jobs for the last time at the Radford Army Ammunition Plant. That, and news of layoffs at Dominion in Roanoke, prompted Virginia Tech's extension office to offer some basic advice for people who fear they won't be able to make their rent or mortgage payments.
"Sit down and plan your family's budget," said Kathy Parrott, an assistant professor in housing, interior design and resource management. "`Figure out what your priorities are."
There may be some ways to cut back on food purchases or other items. Decide where to cut corners.
Deal with the problem head-on. A lot of people try to sweep problems away, or focus on other things before bills, Parrott said. Try to figure out your financial situation and be realistic about it.
"If it looks like you are not going to make payments on time, go to the lender and begin the negotiating," Parrott said. "Talk to your banker or your mortgage lender, credit card companies or your landlord if you're renting. Level with them. Think in terms of what you can do with your living expenses."
In a crisis situation, people tend to lose self-esteem, Parrott said. That's one of the reasons it's best to go to the bank early, before you're in real trouble and while you still have a sense of control and a feeling of confidence.
If necessary, the bank may be able to help you work out some sort of forebearance agreement. That may mean setting up new mortgage payments, or extending those payments, using the equity you already have in a house.
These agreements may not even show up on a credit rating, Parrott said, but even if they do, "it's a whole lot better than defaulting on your mortgage."
Some people believe they can miss a few payments and nothing will happen.
"Not true," Parrott said. "Something can happen, something very real: they can start foreclosure."
State programs can help renters, too, who need temporary assistance, through the Department of Social Services.
"But people don't turn to the government easily," said Ted Koebel, director of Tech's Housing Research Center. "Many go only when they've exhausted all of their other resources."
It helps to remember that banks don't want to foreclose on a piece of property, especially when there is an economic problem in an area, such as a large layoff, Parrott said. Because that means that prices for houses are down and the bank would stand to lose money.
During the first quarter in 1992, the foreclosure rate among people who had borrowed money was 0.7 percent. Nationwide, that figure was 1.04 percent.
Often, the people who go through foreclosures are people who lose jobs and have no resources. They are people who recently have purchased homes, or people who have little equity, little cash reserves.
But Koebel believes many of the arsenal workers have been rooted in the community for some time and have built up equity in their homes. They likely would come out better than people with high incomes who buy - and pay - beyond their means.
But the people who may be in the most trouble, he said, are people who are laid off from the service jobs, people who are subject to the trickle-down effect of large layoffs.
"That would be someone who is laid off from a part-time job because there isn't as much money floating around in the economy," Koebel said.
Often, those people are living pay check to pay check.
"Those are the layoffs that are never announced," he said. "But those families are seriously hurt."
Non-profit organizations such as Virginia Mountain Housing have done a lot to make sure people have affordable housing, Koebel said, especially because people using government programs, such as Aid to Dependent Children, aren't able to make the money last as much as they could 20 years ago.
Since 1970, costs of housing and living have gone up 200 percent, Koebel said.
Aid to Dependent Children has gone up 65 percent.
"What people can buy is substantially reduced," he said.