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Archive for Tuesday, April 21, 2009

Foreclosures up again, but the end may be in sight

April 21, 2009

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County numbers

Number of sheriff’s sales of foreclosed homes in Douglas County.2006: 84 2007: 88 2008: 145 2009 YTD: 8* *Through mid-March.

Source: Douglas County Sheriff's Office

When it comes to foreclosures in Douglas County, the bad news is that sheriff sales of foreclosed homes were up by almost 65 percent from the year before.

The good news is that changes on the national level are giving those facing foreclosure more options to save their home.

According to records from the Douglas County Sheriff’s Office, there were 145 sheriff sales last year. That’s a significant jump from the 88 reported in 2007 and the 84 on record for 2006.

In 2008, there were another 100 sheriff sales that were scheduled and then canceled.

And according to bankruptcy attorney Jonathan Becker, for every one or two homes on the auction block, there are another one or two foreclosures filed in the court system. In those cases, homeowners were able to come to an agreement with the mortgage company before the house up for sale, but the home was probably still lost.

Since the mortgage crisis started, those who have followed the real estate market in Lawrence have said the town had been some what insulated from the extreme peaks and valleys — mainly because of its status as a university town and Midwest location.

But foreclosures are up.

Busy times

Robert Baker, with Housing and Credit Counseling Inc., said foreclosure appointments at the nonprofit agency are at capacity. And the time it takes to work with the client is getting longer as counselors track down who serviced the loan and who now holds the bank note.

“It’s busier than I have ever seen,” Baker said.

According to RealtyTrac Inc., for every 1,041 houses in Kansas there is one foreclosure. It’s a rate that is far better than other parts of the country. Kansas ranks 28th for rate of foreclosure.

“Midwest, in terms of style trends, fashion trends, music, whatever, is a year or so behind what occurs on both coast,” Baker said. “I think your are seeing the trend really settle in here in Kansas.”

Becker predicts 2010 as the end in sight.

“We’re halfway through it,” he said.

So that is the doom and gloom side of the foreclosure story. But both Baker and Becker said there is some hope.

More options

Becker has noticed that mortgage companies are slightly more willing to do loan modifications for those who are in jeopardy of defaulting.

“Maybe out of a 100 bad loans, for two to five they are willing to work out some kind of deal,” Becker said.

And while legislation passed in the Bush administration didn’t help nearly as many people in foreclosure as it had intended to, both Becker and Baker see promise in proposals from President Barack Obama.

In Obama’s $75 billion mortgage relief plan, companies are given incentives to refinance loans at rates homeowners can afford. The target would be to have mortgage payments no more than 31 percent of the homeowner’s income.

For those who have loans that are owned by Fannie Mae and Freddie Mac and are worth more than what the home is worth, the loan can be refinanced. The two lenders finance about 40 percent of all U.S. mortgages.

Changes are also being considered to allow bankruptcy judges to modify mortgages when the property is worth less than what is owed on it, like they already do for bad car or furniture loans.

“If this is implemented as intended, it could help a lot of people,” Baker said of the current proposals.

Comments

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