It was a combination of money-hungry businesses and people desperately wanting a home that made this mess.

As companies started investing more and more money into businesses that offer subprime home loans, more and more people started getting loans they could not afford to pay back. Now these people are stuck deciding if they should pay for the mortgage or pay for food.

In 2006, the Madison County Sheriff’s Civil Department sold 1,082 homes through sheriff sales. This year will be similar to last year. These houses are set to be sold when owners do not pay for more than three months of house payments, Abby Ramsey, court administrator for the sheriff’s department, said.

“To cause a sheriff’s sale, a person has to miss three house payments,” she said. “Once they miss the third payment, the bank contacts their attorney, and they do a foreclosure, they sue them. At that time, they have a hearing. The bank gets a judgment.”

Once that judgment is put in the books at that clerk’s office, the attorney signs the praecipe, a formal paper that tells the court to issue that foreclosure to Ramsey. Then the house goes to the sheriff sale, where anyone can put in a verbal bid for the house. The bank puts in the first bid.

“If someone outbids the bank, they own it that day,” Ramsey said.

A guaranteed check is due by the end of that day, Ramsey said.

In 2005, Madison County had 957 houses go through the sheriff’s sales. The number of sales started going up dramatically after 1995, when the county sold 46 houses all year, Ramsey said. The rates started doubling in 1998, she said.

Larry Robbins, an Anderson bankruptcy lawyer, said he thought that the mortgage foreclosures have led to some bankruptcies, but there are fewer people filing for bankruptcy because of the law that passed in 2005 that made penalties for bankruptcy stronger.

People have changes in their lives that affect how much they can pay each month, Robbins said.

“It could be that their employment has changed,” he said. “They’re making less money than they were.”

And with subprime loans, the adjustable interest rates increase sometimes every six months, causing more problems. The interest rates can go up to 11 or 12 percent, while a conventional mortgage interest rate sits at 6 or 7 percent, Robbins said.

But this is not a problem only in Madison County. It’s happening all over the country. The Wall Street Journal published an article June 27 about subprime loaning practices. According to the article, about 13 percent of subprime loans are near foreclosure, affecting tens of thousands of homeowners. The Center for Responsible Learning has projected that about 20 percent of subprime borrowers from the past two years could go into foreclosure, which will cause 2.2 million people to lose their homes.

The problem is hitting California and the Midwest the hardest. The Web site CNNMoney.com issued a list of the top 500 foreclosure ZIP codes, and on that list Ohio had 49 ZIP codes, Michigan had 34, Illinois had 25 and Indiana had 16. The places in Indiana were all in Indianapolis except for two — one in Fort Wayne and one in South Bend.

Robbins said the Midwest is most affected because of the way the economy has gone in the area.

“I think a lot of it has to with the economy,” he said. “A lot of jobs have gone away, you know, the high paying jobs, and people’s income have gone down.”

Add onto that the rising real estate taxes and insurance, and some homeowners are in for trouble.

“We’re going more toward the minimum wages jobs,” Robbins said. “We’ve lost so many good paying jobs. It comes down to a situation where a person has to go through a (job transfer), and sometimes they just abandon their homes.”



Number of sheriff sales in county

1985 — 92 houses

1989 — 76 houses

1995 — 46 houses

2005 — 957 houses

2006 — 1,082 houses

Source: Madison County Sheriff’s Civil Department



Number of foreclosures filed in county

2004 — 966

2005 —1,064

2006 — 1,284

2007 (Jan. 1 to June 30) — 554

Source: Madison County clerk