Economist at foreclosure seminar in Cape predicts tough 2010

Since 2006 the number of foreclosures has increased by 2 million and the crisis is expected to continue for months, said William Emmons, an economist with the Federal Reserve Bank of St. Louis.

"Is the end in sight?" Emmons asked a group of about 30 people attending a foreclosure crisis seminar Friday in Cape Girardeau. "While all of us would like to say yes, I can't.

"I anticipate that 2010 will be very, very rough," Emmons said. "It could easily last into 2011" and even beyond, he said.

Emmons was among the speakers at the seminar hosted by the Federal Reserve Bank of St. Louis, the Federal Deposit Insurance Corp. and the Community Caring Council. He said the housing boom and then the sudden fall of home prices were a contributing factor to the foreclosure crisis.

RealtyTrac's latest monthly report showed that one in every 385 homeowners nationwide received a foreclosure notice in October. While the 332,292 foreclosures were a decrease of 3 percent from the previous month, foreclosure notices served were up 19 percent from October 2008.

"This is unprecedented," Emmons said. "You have to go back to the Great Depression era to see a catastrophe of this magnitude."

Emmons said Cape Girardeau has fared better than metropolitan areas because of the sectors that drive the local economy such as education, health care and government.

Communities with a strong employment base that provides stable jobs "have been largely protected from this problem," Emmons said. "Folks here in this immediate area can consider themselves fortunate so far. But there's no sense for complacency."

Emmons said future homeowners need to be educated so they won't make the mistakes that can lead to foreclosure.

Local panelists discussed the most prominent foreclosure issues they've witnessed with clients and a concern about payday loan companies.

Most of the panelists said their clients need financial assistance, and payday loan businesses are an option used.

Mary Gosche, a human development specialist for Missouri Extension in Cape Girardeau County, said emotional depression and job loss create anxiety. She said people who use payday loans don't understand that such arrangements don't meet their true needs.

"A lot of people because of life issues are using those payday loans to live, to make monthly payments on things, to get by month to month," said Denise Wimp, director of First Call for Help. "That creates issues by preventing them from one day purchasing a home."

bblackwell@semissourian.com

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