Things seem to be different in Dallas:
dallasnews.com
Foreclosures soar as telecom biz sinks
Collin County takes the brunt, with figures up 154% from last year
10/24/2002
By ANGELA SHAH / The Dallas Morning News
Former telecom executive Keiichi Stevens has lost his job. He's used up his savings.
Now, he's afraid he'll lose his Plano home.
"We haven't yet missed any payments," he said, "but it's imminent this month."
For a growing number of North Texans, the technology bust spreads far beyond devalued stock portfolios and corporate layoffs. Persistently jobless and their savings spent, these New Economy foot soldiers now face the prospect of losing their homes to foreclosure.
That pain is acutely felt in Collin County. Home to many of the telecommunications industry's brand names, the area thrived in the 1990s as newcomers flooded in to worker-starved companies. Now, the downturn is washing away some of the wealth just recently created by the boom.
George Roddy of Foreclosure Listing Service put it this way: "We had almost 10 years of prosperity in D-FW, and it stopped."
As beleaguered companies have shed workers over the last two years, city jobless rates have multiplied several times. Plano's 5.6 percent unemployment rate is more than three times the 1.8 percent figure of September 2000. McKinney reported an unemployment rate of 11.1 percent last month, its highest level ever.
The tumult has hit home – literally. The number of homeowners in default on their home loans is now at the highest point since the early 1990s. In Collin County, 237 homes were posted for foreclosure last month, compared with 93 homes in September 2001, an increase of 154 percent, according to statistics from Foreclosure Listing Service.
Dallas County foreclosures rose over the same period, from 665 homes to 845. But that's an increase of only 27 percent.
'Another artifact'
"This is another artifact of the high-tech bubble," said Jack Harris, a research economist at the Real Estate Center at Texas A&M University. "Most of these homes were purchased a few years ago, and they are mostly in the fast-growing, high-priced suburbs."
Through Texas' booms and busts over the last 20 years, Mr. Stevens had held onto his job and financial security, even during his time in the energy industry. But in April, the telecom startup he joined just two years earlier fell victim to the slowing economy, and he found himself on the unemployment rolls.
Since then, the couple has eaten through retirement funds to make ends meet. Though his wife, Kathy, has a part-time job at the University of Texas at Dallas, her paycheck won't cover the $1,000 mortgage payment.
"It's sort of the end of the line," he said. "It's a very humbling experience. You don't feel that you're in control."
Most experts say the economy has bottomed out and resumed growing, albeit sluggishly. But the region's telecom firms have yet to find a firm footing. Mired by over-investment and too-little demand, they continue to slash payrolls.
Total technology jobs in Dallas-Fort Worth have shrunk. As they did so, many North Texans found themselves trapped in the churn.
Only a fraction of homes posted for foreclosure actually make it to auction at the courthouse. Sometimes, the lender and property owner agree to new payment terms. If the owner has enough equity in the house, the lender may renegotiate the loan to help bring the mortgage up to date. If another arrangement can't be made, the lender can take the house back and sell it through a broker.
And, in general, the housing industry has been a rare source of U.S. economic strength this year.
Fleeting prosperity
But Collin County's dramatic surge in postings shows that some of the prosperity in the northern-tier suburbs of recent years was fleeting indeed.
"We're getting five to 10 phone calls a day from people who have basically become unemployed and are behind in their house payments," said Jeremiah Johnson, director of education at Consumer Credit Counseling Services of North Central Texas.
At the Community Lifeline Center in McKinney, William Robertson has watched his client load bloom. Cash-strapped homeowners today are seeking twice as much in mortgage assistance as they were last year.
"People who used to donate to us are now on the other side looking for help," Mr. Robertson added. "For them it's usually the first time ever that they've faced unemployment, and it's really hard."
Laid off 6 times
In the last two years, Ted Woods has been laid off from six companies. He went from earning $80,000 as a telecom engineer with a new $200,000 home in Wylie to being jobless and homeless.
In September 2000, Fujitsu Network Communications Inc. cut him loose after seven years. He quickly found work at WorldCom's MCI division but was again laid off in February 2001.
"I then had a couple of weeks' stint at Nortel," said Mr. Woods, who then joined Qwest Communications. That job lasted a few months. Mr. Woods went next to a small telecom service provider, which folded in September 2001.
By that time, he and his wife had spent most of a Roth IRA account. Medical bills of about $7,000 from the difficult birth of their son, Christopher, arrived at that moment.
He worked a hodgepodge of jobs two and three at a time, including stocking shelves at a liquor store, but couldn't cover mortgage and car payments of about $4,000 a month.
The bank foreclosed on the Woodses' home in July.
The next month, he said, he had a mental breakdown and spent a week at Parkland Memorial Hospital. Caregivers there told him about Samaritan Inn in McKinney. On Sept. 11, at 1:30 p.m., he said: "I walked in and told them, 'I need help.' "
Though extreme, Mr. Woods' story is not unheard of, community leaders say.
"For many of them, there doesn't seem to be any light at the end of the tunnel," said the Rev. Richard Zalesak at Christ Church of Plano.
Ironically, many of their neighbors continue to participate in a housing boom.
Buoyed by decades-low interest rates, renters are buying homes. Many homeowners are either trading up or refinancing, using the extra cash to fuel what little growth the American economy has seen in the last year.
But attractive mortgage deals count for little when workers lack a paycheck.
Delinquencies rise
Nationally, the residential delinquency rate – the proportion of households behind on their mortgage payments – rose to 4.77 percent in the second quarter, up from 4.65 percent in the first quarter, according to the Mortgage Bankers Association. Also, mortgages in foreclosure rose to 0.4 percent, the highest rate since the bankers began tracking such data in 1972.
Texas mortgages in foreclosure were about the same, at 0.39 percent – though these levels haven't reached those during the late 1980s and early 1990s. The state rate hit a high of 0.78 percent in the second quarter of 1989.
Those like Mr. Stevens are on the brink of these statistics. To stave off foreclosure, he's planning to meet with his lender soon.
"Emotionally, this has been a really big struggle for me," said Mr. Stevens, who came to Texas in the mid-1980s to work for an oil and gas company and emerged intact from that decade's brutal recession.
After 11 years as a furniture company executive, he opted for a chance to be part of North Texas' telecom industry. In March 2000, that seemed like a good idea.
"We just ran out of time," Mr. Stevens said. "The opportunity for revenues was diminishing daily."
Since he lost his job, the Stevenses have spent about $15,000 in savings to pay their bills in the last seven months. Plans to remodel their 16-year-old home or to take a long-hoped-for vacation are on hold indefinitely.
"I had wanted to take her to Hawaii," he said. "Now, it's a daily struggle."
Even those who are still on a payroll have found it difficult to stay current. Priscilla and Roderick Ramos of McKinney have already rescheduled their mortgage payments. The planned expansion of the restaurant where Mr. Ramos works disappeared along with the telecom industry's fortunes.
"He used to make bonuses, and he doesn't now," Ms. Ramos said. "Last October, November, we started getting behind and making them late. We were stealing from Peter to pay Paul."
They set up a new payment schedule with their mortgage lender, but "we're starting to get a little behind again," she said. "It's what keeps us up at night. It's hard to move up when there's nowhere to go." |
