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Costs of people and loans

Posted Friday, August 17, 2007, at 9:23 AM

Quick comments on two unrelated yet very related subjects:

*The Census Bureau has asked immigration agents to halt enforcement raids during the 2010 census so illegal immigrants can be counted, according to the Associated Press.

Similar fears seriously hampered Shelbyville city officials' attempts to conduct a census last year. They say power hookups indicate a population of about 21-22,000 but found it was obvious many illegal aliens were trying to evade being counted.

The Census Bureau's 2006 estimate of Shelbyville's population is about 19,000. I'd imagine it's quite a bit higher if you factor in illegal immigrants.

Hopefully a correct count can be obtained next time. Increased federal funding depends on those numbers. And if immigration laws aren't going to be enforced locally, we might as well get money for the increased population.

Another note: Factor in multiple subdivisions just outside the city limits -- those in which it's just like being in Shelbyville except for no municipal services or city taxes -- and what I'll call the "city zone" population is more like 25,000. It'll keep growing.

If the city was more aggressive about annexation -- and note I'm not saying it should be, just pointing out a fact -- its property tax base could grow accordingly, although the cost of expanding city services, adding street lights in new areas, etc., would also rise.

*The Federal Reserve is adjusting its discount rate on loans to banks today due to problems facing mortgate companies.

"The markets have been pummeled by a rapidly spreading credit crisis that began with rising defaults in subprime mortgages -- home loans made to people with weak credit histories," the Associared Press reports. "Now the problems are spreading to other borrowers. Countrywide Financial Corp., the nation's largest mortgage banker, was forced to borrow $11.5 billion on Thursday so it could keep making home loans."

It seems like what I'll call substandard subdivisions -- those in which the homes appear in disrepair within two or three years after construction due to owners' lack of care -- seem to be growing and growing in several areas in and near Shelbyville. Note that I'm talking about a few particular areas, not all new developments.

Look closely at the foreclosures listed in the print edition of the T-G classifieds. A high percentage are coming from those struggling areas.

There are plenty of good, honest people in those subdivisions who take care of their houses, pay their bills and probably wince at the condition of some of their neighbors' residences.

But I wonder if some unwise loans are being made just to fill some of those homes, considering the foreclosure percentage.

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Sub-prime loans has cause a lot of the problems with the housing industry these days. I am not going to name names here but one in particular company here in Shelbyville is well known for building houses in areas that were once known as bad areas selling these homes at outrageous prices and then obtaining sub prime loans to almost anybody who applied. (I personally know of some people who got loans that were on unemployment or not even making enough income to cover the cost the house payment) Of course they have now been foreclosed on..which is sad. This not only hurts the consumer but the industry as a whole. The elimination of sub prime loans is hurting the Real estate market because not many people these days have 10-20 percent to put down on a home a 100 percent loan is a sub-prime loan and they are no longer an option thus hurting people who could possible get a home and pay for it but just don't have 15 or 20 thousand dollars laying around for a down payment.

-- Posted by Dianatn on Fri, Aug 17, 2007, at 9:46 AM

these so called sub prime homes are built for one reason and one reason only and that is basically to put illegal immigrants in them, i don't know if people here have realized it but i would say over the last 6 years there have been at least 300 of these homes built to make a quick so called profit for how ever the company is that is building them, but i will agree as of late a lot of these houses are now being vacated. This is nothihg more than pure exploitation on the part of many people and companys that are making quick and easy money.

-- Posted by slingshot on Fri, Aug 17, 2007, at 11:29 AM

Well Honestly I personally do not know everybody who has been put in one of these homes but I do know several none of which were illegal or even migrants. But that is not saying that there were none, just none that I know of.. and then again we may be talking about two completely different areas here.

-- Posted by Dianatn on Fri, Aug 17, 2007, at 1:43 PM

There are over 115 homes in pre-foreclosure, auction status or bank-owned in Shelbvyille alone. This is really sad and there are several to blame for this.

1. Mortgage loan lenders - These guys are salesmen. Their job is to sell a loan and so they'll do whatever it takes to get someone in a home. Unfortuneatly, they offer up interest only and variable rate mortgages that seem like a good idea at the time but eventually hurt the borrower. I'm not saying that all mortgage lenders are bad and I know of several that are sure to point out what could be a potentially bad situation for the borrower.

2. Contractors - Some subdivisions are being put up in matters of days. I am pretty close to this type of situation and I know that they are using cheap materials and shortcuts anywhere they can. Some of these houses are literally falling apart within a few years...no matter how well the homeowner tries to keep up. And, just as someone else pointed out, just about anyone can get into a new home these days and some just do not care about taking care of their property. This causes property values in that area to decrease. Within a few years, even if a person wanted to get out of a bad situation, they are already upside down in a mortgage loan. (It's almost like buying a new car).

3. Homeowners - It's all about keeping up with the Jones'. Most know before they go in, what they can and can not afford. But they always want more. In today's world, we value ourselves on our stuff. A bigger house means a better person. This one is the saddest of all three.

No doubt everyone wants to own a home. It's the American dream. I just wish that everyone would do some extra homework before diving into a huge decision like buying a home.

-- Posted by saveit on Sat, Aug 18, 2007, at 10:20 AM

hello Dianatn i read that you know of no immigrants that live in these houses, wow....i don't know where you live but if you go down a street called "Green Lane" there are at least 100 house scrammed together that were practically

built over a 8 month period that are filled with as many people as you can get it them, 5 cars in the driveways, houses that were built a year ago look like they are about ready to fall down, and thats just one subdivision...there are a few more.

-- Posted by slingshot on Sun, Aug 19, 2007, at 10:00 AM


I just said I do not know of any immigrants personally in these homes but I also went on to say that I did not know everyone who bought these homes. And Green Lane was not the area I was referring to.

-- Posted by Dianatn on Sun, Aug 19, 2007, at 1:00 PM

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David Melson is a copy editor and staff writer for the Times-Gazette.