ROCHESTER HILLS, Mich. (AP) – At 14, Joan Cyman hauled wood and clutched a hammer with her father to build a deck on the back of their house.

It was one of many projects to turn the already attractive four-bedroom, three bathroom suburban house into a home. She was 12 in 1976 when they left a rough neighborhood in Detroit to be among the first families on the cul-de-sac in the gleaming new subdivision.

“It was like a family home,” she said. “I felt like it was left to me and should have stayed there the rest of my life.”

It didn’t.

At 41, Cyman is 145 miles north in rural Roscommon County, trying to put her life back together after losing her home to foreclosure in 2006. Now a long-vacant eyesore with a patchy, overgrown lawn and torn auction sign in front, the Rochester Hills residence has a buyer, a businessman whose sideline buying foreclosed homes has picked up as the housing market has tanked.

“It does present a lot of opportunities,” said Mike Smitha, 52, a local investor who is waiting to close on the property.

“You have to look at it as a business. It’s simple economics: Buy as cheaply as you can…and sell it for as much as the market will bear.”

The home was one of 700 seeking new life in a recent auction in Michigan, which had the fourth highest foreclosure rate in the nation in September, according to Irvine, Calif.-based RealtyTrac Inc. Automotive industry cutbacks in the state have led to the nation’s highest unemployment rate as well as a declining population.

When people fall on hard times, so too do their homes.

Cyman said money disputes with her husband, from whom she’s separated and divorcing, made it difficult for her to make ends meet. She fell behind on her mortgage payments, and her lender started the foreclosure process in September 2005 on a $228,650 mortgage she took out nine months earlier.

The colonial-style house at 949 Homestead Court has a purchase agreement for $136,500 – a “deal of the century” for a home whose value, once repaired, would be $250,000, said real estate agent Ron Walraven. The home that once impressed neighbors now is a handyman’s special: Walraven estimates it needs about $40,000 to update an old kitchen, repair damage caused by basement flooding and perform other major projects.

Like so many other homeowners, Cyman took advantage of lower interest rates and better terms in the housing bubble in the early part of the decade. In 2002, after the original $37,500 home mortgage established by her late father was paid off, she took out the first of three adjustable-rate mortgages to pay large bills. Two others followed, and she said she was enticed by the lower rates she was being offered.

“I did (get) caught up – everyone was doing it,” she said. “They’d call me and say, ‘I can put you in a seven-year ARM.’ The payment would go down.”

Yet her overall household debt rose. Her salary would have covered the mortgage – which she said was about $800 a month by the time of the final refinancing – but hers was the only income coming in at the time.

Cyman said she tried to work with her lender, Wells Fargo & Co., on a plan to catch up on back payments. She said the company was uncooperative and told her there was nothing it could do.

A Wells Fargo spokesman said he could not comment on Cyman’s case, but the company said in a statement it works hard to keep customers in their homes and has expanded its efforts to help them. Walraven and other industry observers say lenders overall have become more involved in preventing foreclosures as the number has skyrocketed.

“Eighteen months ago, their position was not to easily work it out like it was today – especially in Detroit, where we have a glut of properties,” Walraven said.

Dan Sugg, president of the Michigan Mortgage Lenders Association, said his industry recognizes the responsibility it shares in keeping homes out of foreclosure. Among other things, he said, it’s holding foreclosure-prevention workshops in the hardest-hit areas.

“The bottom line is (a) homeowner agreed to repayment of debt, signed the note and knew the terms of the mortgage. But we understand that situations change and that things can become more difficult. That’s why the (loan) servicers are helping the homeowners through the situation.”

For Cyman, whose father was a successful area business owner and mother a longtime member of the local school board, losing the house felt “emotional” and “degrading.” Tadeus Cyman died in 1989; his wife, Lorraine, in 1992.

“I just feel sorry for the neighbors next door that are dealing with that house right now,” said Joan Cyman, now living in a small cottage she bought many years ago and running a technical help desk at a community college. “I’ve heard it just looks terrible. They haven’t done anything to it.”

In August 2006, Walraven said he received a $200,000 cash offer for the home – still not enough to cover what Cyman owed. But that fell through when the prospective buyer had a family emergency. After another year on the market, he said, the seller decided to include it in the auction of 700 Michigan homes put on in September by Texas-based auction firm Hudson & Marshall.

Smitha said the home caught his eye before but he thought it was too expensive for its condition. When he saw it again in a Hudson & Marshall flyer and learned the firm was accepting electronic bids, he decided to “take a little stab.”

“They called back and countered,” he said. “I turned them down and figured I’d never hear anything. About four or five days before the auction, they called me back and said, ‘The lender decided to accept your offer.”‘

Smitha has been involved in real estate for 30 years as a licensed broker and agent, and has been a builder for the past 12. He said he has been an investor all along, but his pace has picked up during the past couple years as the market has declined.

“It presents some risks but on the other side of the coin in presents opportunities: The best time to buy is when everyone else thinks you shouldn’t,” he said. “The best time to sell is when everyone else thinks you should buy.”

Smitha is among the more than half of auction buyers who are investors, not owner occupants. He awaits closing on it, then plans to fix it up and sell or lease it sometime next spring. Still, he said he expects to spend more than $40,000 to repair and renovate it.

That’s an even greater risk in a down market – but he sees much the same upside that Tadeus and Lorraine Cyman saw 30 years ago, including a nice neighborhood, solid school district and ample living space.

“There are literally hundreds of these houses on the market in the Detroit area,” he said. “It’s sad but obviously I didn’t create the problem. Someone has to buy these and fix them up.

“Really, what people like me do, is return a house to the market in a livable condition that prior to that most people didn’t want to walk through.”

AP-ES-10-26-07 1807EDT

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