Foreclosures, delinquent mortgages on the rise

by Carol Crump
Wednesday, September 10, 2008 9:35 AM MDT

Foreclosures are up and so are delinquent mortgages. Home prices have decreased.

And we’re not talking about California or Florida.

The signs of the national housing slump we’ve been hearing about for months in the national news are beginning to appear in Casper.

Last week, 34 new applicants came to Interfaith, the HUD-approved housing counseling agency in Casper, for assistance to pay mortgages or rent.

“The numbers are up 20 percent,” said Interfaith Director Linda Brown. “Some wait so long. They hate to come in.”

National, state and local data on home sales, price trends and foreclosure activity are collected by First American CoreLogic.

According to the company's Aug. 15-31 report, the Casper area numbers for foreclosures and delinquent mortgage loans are up more than a percentage point from June 2007.

Wyoming’s sub-prime loan market was only 8 percent of the total home loan portfolio versus 15 percent nationally, but even in the Cowboy State, sub-prime loans are the highest percent -- 11.29 percent -- of past due payments, according to the Mortgage Bankers Association.

Thirty-six percent of the foreclosures in the state were on sub-prime loans.

Home prices also are down, by more than 6 percent, and single-family home sales are down even more, by 15.3 percent from June 2007, according to CoreLogic.

A report from the Central Wyoming Homebuilders paints a slightly different picture, indicating that the market has “moderated,” but has been “stable for 12 months.”

“We’re not really seeing a drop in prices; we’re seeing less increase,” said Wallick & Volk loan originator Joanne Demorest.

The 10-year veteran with the family-owned regional mortgage bank said the “complexion” of Casper’s housing market has changed due to tightening of mortgage regulations, a reduction in sales during the harsh winter of 2007 and shortage of rental vacancies.

There also are more houses on the market -- 579 in August 2008, up from 300 last August -- so buyers have more choices.

“People read the national news and it scares them from buying," Demorest said. "We’re not California. The national news has caused panic here."

Fannie Mae and Freddie Mac, the nation’s largest holders of mortgages, now are requiring loans to be priced for “every risk factor out there,” Demorest said.

That means that some people who could have qualified for a home loan a year ago cannot buy a home today.

People who moved here for jobs are forced to rent when they can’t buy a home. There are fewer rentals available because investment rental property may not have cash flow when larger down payments and fewer willing investors are factored in.

“There’s a ripple effect in a lot of different directions,” Demorest said.

During the fiscal year that ended June 30, Brown said Interfaith helped 559 families stay in their homes, at a cost of more than $93,000.

Depending on funding availability, the nonprofit agency will try to pay one month of a mortgage or rent, or a rental deposit for qualified applicants.

With its designation as one of the state’s HUD-approved housing counseling agencies, Interfaith also can help those with sub-prime adjustable rate mortgages find refinancing before they lose their homes.

“It’s not just the foreclosures,” but the high cost of rents that compound the problems of people who can’t pay their mortgages, Brown said.

According to the Interfaith director, the average rent in Casper is $1,000 a month. Paying a deposit of $1,600 and first and last month’s rent can come to more than $3,000.

“If they have that money, they might as well pay the mortgage,” Brown said.

Demorest confirmed that Casper landlords have been “aggressively” raising rents to the point where some have gone up 20 percent since 2007.

Help is available

According to HUD, help from the federal government is on the way, even in Wyoming.

Beginning Oct. 1, through legislation called Hope for Homeowners, the Federal Housing Administration will help some eligible borrowers with high-cost, sub-prime adjustable rate mortgages refinance into FHA-insured mortgages they can afford.

The program, FHASecure, also offers lenders alternatives to foreclosure.

Distressed homeowners in Wyoming don’t have to wait for the new program, according to a HUD news release.

“HUD understands that for many families, time is of the essence. These families should not wait to obtain help when it may already be available,” said HUD Secretary Steve Preston in that news release.

Immediate assistance is available by calling 1-800-569-4287 or visiting Interfaith or any of the other HUD-approved housing counseling agencies located in Cheyenne, Ethete, Laramie and Sheridan.

Information is available on the HUD Web site, www.HUD.gov.

HUD tips for avoiding foreclosure

If you are unable to make your mortgage payment:

1. Don’t ignore the problem. The further behind you become, the more likely you are to lose your home.

2. Contact the lender as soon as you realize you have a problem. There are options to help borrowers through difficult financial times.

3. Open and respond to all mail from your lender. The first notices will offer good information about foreclosure prevention options. Later notice could include notice of pending legal action.

4. Know your mortgage rights. Read your loan documents so you know what you lender can do if you don’t make payments.

5. Understand foreclosure prevention options

Check the internet at www.fha.gov.

6. Contact a nonprofit housing counselor. The U.S. Department of Housing and Urban Development funds free or low-cost housing counseling nationwide.

7. Prioritize your spending. After health care, keeping your house should be your first priority.

8. Use your assets. Consider selling assets like a second car or jewelry or getting a second job to show your lender you are willing to make sacrifices to keep your house.

9. Avoid foreclosure prevention companies. For-profits that promise to negotiate a loan work out with your lender charge a hefty fee. You don’t need to pay fees for foreclosure prevention help.

10. Don’t lose your house to foreclosure recovery scams. If any firms claim they can stop you foreclosure immediately if you sign a document appointing them to act on your behalf, you may be signing over the title to your property.

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