By Keith Benman, Times of Northwest Indiana
keith.benman@nwi.com
CROWN POINT | David Lopatkiewicz was able to benefit from someone else's misfortune.
Last fall, the Crown Point father of one bought a foreclosed home on Madison Street being resold by an investor.
"I saved probably $10,000, maybe $20,000," he said as he used a leaf blower to clear freshly cut grass off his home's walkway last week.
For those looking for a deal, there are plenty more foreclosured homes for sale sprinkled across the middle-class neighborhood stretching from 101st Avenue to 93rd Avenue on the north side of Crown Point.
There also is a high number of something else sprinkled throughout the neighborhood -- the high-interest subprime loans that are held responsible for the wave of foreclosures and economic downturn sweeping the United States.
A Times computer analysis of federal Home Mortgage Disclosure Act data shows that a row of census tracts stretching from Crown Point to Gary forms a kind of subprime alley in which an unusually high percentage of such lending took place.
MORE: Look at an interactive map of subprime loan quantities in the region.
Subprime alley
In 2007, 83 subprime loans were originated for homes in the census tract containing the north side of Crown Point, the fourth most of any census tract in Lake County. In a Merrillville census tract just north of there, 114 of the high-priced loans were originated. Due north in Gary is the only other census tract in which more than 100 subprime loans were extended to buyers.
Although those census tracts have an unusually high concentration of subprime loans, there were plenty to go around for the rest of the region. Altogether, 4,984 high-priced loans were made in Lake and Porter counties in 2007 alone, according to the federal data culled during The Times investigation.
The total number of such loans still being paid by borrowers actually would be much higher because subprime lending has been in full bloom since the early part of the decade.
And it's not just borrowers being affected by the risky lending.
Swallowed up
In Gary, the wave of subprime lending is swallowing up whole neighborhoods and taking them under, said Eric Weathersby, an organizer for the activist group ACORN Northwest Indiana.
"For a community like Gary -- that is already economically disadvantaged -- subprime lending was just devastating," Weathersby said.
The effect is particularly devastating in Gary because a home has little chance of being resold once it goes into foreclosure, Weathersby said.
He remembers one subprime lender, Option One, that would pay people to go door to door with leaflets with slogans such as, "No down payment!" and "Bad credit? No problem!"
Federal data shows that Option One Mortgage Corp. was responsible for at least 127 subprime loans in Lake and Porter counties in 2007 alone.
A region problem
But the subprime lending crisis has affected more than economically disadvantaged neighborhoods, The Times probe found.
In better-to-do neighborhoods in Lake and Porter counties, the promotion of the high-priced loans might have been a little more sophisticated but appears to have been just as effective.
A couple doors down from Lopatkiewicz's Crown Point home on Madison Street sits a foreclosed home, and a few doors up the street another one is in the foreclosure process, according to RealtyTrac.com.
Homes in the Crown Point neighborhood range from 1950s-era ranch homes on tree-shaded streets to expansive new brick giants along newer streets.
Altogether, two dozen homes that have either been foreclosed on or are in the process of foreclosure dot the one-square-mile neighborhood. That is not an inordinate number for a county in which 3,960 homes were foreclosed on last year -- the most in 13 years, according to the Lake County Sheriff's Department.
But the increased numbers now are an uncomfortable fact of life for residents of the Crown Point neighborhood.
Worrisome trend
For one resident, the foreclosed homes are a worrisome trend.
"We get good neighbors, they just don't last," said Kathy DeVries, who lives in the Crown Point neighborhood. "I think it's the economy."
The home next door to the DeVries' residence was foreclosed on more than a year ago, and another down the street met the same fate at about the same time. The weeds and uncut grass at the home next to the DeVries' handsome bi-level are a dead giveaway that something happened there.
Kathy DeVries said she worked for years in real estate in Illinois and can identify another factor behind the foreclosures.
"It's these loans that are to blame," she said. "All these fancy loans."