Though housing is less devastated here, not everyone in Oklahoma is so lucky

By Paula Burkes

Published: February 26, 2008

Oklahoma isn't suffering the foreclosure casualties as elsewhere in the country, where countless homes aren't selling and others are being abandoned because owners can't make payments.

The number of foreclosures in the state was down more than 12 percent last year. Still, the mess in the mortgage industry is hitting home for some Oklahomans.

Bob and Dorothy Harper of Yukon grudgingly put their dream home up for sale Jan. 16. They had it custom built in 2002 to fit their every desire.

There are more than $60,000 in upgrades, including imported Italian tile shipped from Dallas, marble window sills, oak trim, a commercial kitchen and pool and adjoining hot tub.

"It's not easy to come out of this house,” Bob Harper, 60, said. "It's everything we worked our whole lives for. We'll never own anything like this again.”

A real estate broker with variable income, Harper took an adjustable loan, figuring he'd refinance it later. He took out a second to furnish it.

Three years later, the interest rate on Harper's 30-year loan reset from more than 6 percent to 11 percent, or $940 to nearly $1,500. The hike coincided with Harper's wife's hip replacement surgery, which caused her to lose her livelihood as a beautician.

"We were like deer caught in the headlights,” Harper said. "We liquidated our 401ks, Roths, everything to hang onto the house and pay our bills.”

Refinancing wasn't an option because in today's crippled mortgage industry, lenders are making few, if any, stated-income loans — the type of loan that helped the Harpers buy the house.

The couple have listed their 2,153-square-foot home for sale and priced at $220,000, $8,000 less than what they paid for it.

The Harpers are just one example of some Oklahoma homeowners entangled in what's often described as the nationwide "mortgage mess” or "mortgage crisis.” With the appreciation of home prices the first half of the decade, buyers frequently sought adjustable rate mortgages, interest-only loans and other creative financing to get into homes.

Now that the loans are resetting, many face payments they can't afford. Their only options are to refinance their loans, default on them — or sell, if they owe less than what their homes are worth, can afford the Realtor commissions and any prepayment penalties.

Tamela McSwain grapples with a different predicament. She married and moved into her husband's home in Mustang in September, but has been trying unsuccessfully to sell her home in west Edmond since late July. The newlyweds have been carrying two mortgages, at about $3,500 a month.

"All I brought with me was my Krups coffeemaker and clothes,” McSwain said. "I left my home furnished, in hopes it would show better.

"It's been plenty long for me.”

Her new husband's home is a little bachelorized, she said. Plus, they're constantly needing candles, area rugs and other things she has at her house — but it's a half-hour's drive away.

"I'd like to dump the second mortgage, but I don't want to be silly and just dump the house,” McSwain said. She already has dropped the price on the 1,975-square-foot home $3,400 to $198,500.

According to the Oklahoma City Metro Association of Realtors, McSwain's situation is more of an exception than the norm. On average, most homes are taking about 95 days to sell, according to the association.

Mary Gardner of Edmond is among homeowners who took a creative loan. In 2003 she refinanced her home with an interest-only note.

The loans free borrowers — for up to 10 years — from paying the amount they'd typically pay toward principal, or the original loan amount. For a set period, they pay only interest. Then, their loans adjust back to full amortization over the remaining term. For example, on a 30-year loan of $150,000 at 6.3 percent fixed rate, the monthly payment — when most of it goes toward interest — would be $961; $829 in interest and $132 in principal. With an interest-only loan, the monthly payment would be $829.

"Not being locked into a higher payment has been very advantageous for us,” Gardner said.

When she took out the loan, she was working a mostly commission-based job and used the money she would have paid toward principal to pay off high-interest credit card debt, which she's now close to retiring.

Still, Gardner, who now works for a title company and draws a regular paycheck, admits she's a little scared of the current mortgage climate. Before her loan resets this summer, she plans to refinance it to a traditional fixed-rate, ideally a 15-year mortgage.

"I probably can make it without refinancing, but don't want to,” Gardner said. "Now that the rates are more favorable, I want to lock into a regular thing.”

"It's not easy to come out of this house. It's everything we worked our whole lives for. We'll never own anything like this again.”

Bob Harper

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