Saturday, January 20, 2007

Record mortgage foreclosures getting very close to home.

Things are serious, in Stearns and Benton County, as the Jan. 17, St. Cloud Times reports:

Stearns and Benton counties handled 317 foreclosure auctions last year combined, an 83.2 percent increase over the 173 recorded in 2005, according to the sheriff's departments.

Benton County foreclosures soared 172 percent to 98 last year, while Stearns County auctions climbed 59 percent to 219.

In the past, homeowners typically [were] foreclosed on their homes because of a life crisis — a job loss, health issue or family change.

That's still true, but more homeowners fell victim last year because of financing arrangements such as adjustable rate or interest-only mortgages, said Dana Shell, program director at the Home Ownership Center of Minnesota.

The triple-digit spike started in August, when the foreclosures increased 158 percent in Stearns and Benton counties compared with a year ago. That continued to escalate last fall, and October posted the largest increase, 387 percent over a year ago.

"There is no question that this is affecting all (income and home value) levels," said Dan Williams, senior program manager at LSS Counseling Services.

And industry experts say the St. Cloud area has not reached its peak. Instead, they are bracing for what some call a "foreclosure tsunami" as a projected $1.2 trillion to $1.7 trillion in mortgage adjustments nationwide come due this year.

The housing slowdown has not helped owners trying to sell homes they no longer can afford. St. Cloud-area homes spent an average 97 days on the market last year, according to a St. Cloud Area Association of Realtors Multiple Listing Service report. Almost half the homes sold last year in Benton, Sherburne and Stearns counties spent more than 120 days on the market.

The tri-county area had almost a 13-month supply of homes on the market in December, up 19.8 percent from the prior year.

In almost all cases, mortgage lenders buy back the property for the loan amount and put it on the market. Some companies have closed or stopped providing mortgage services because they cannot afford foreclosed properties, said Wade H. Abed, president of the Minnesota Association of Mortgage Brokers and owner of Northwest Mortgage Company in the Twin Cities.

Could Ramsey have its own "foreclosure tsunami?" Well, consider this -- It is unclear from the article whether a spate of massive new building and development, as has happened in Ramsey, was a contributing factor to the foreclosure crisis. But if new homes end up backlogged against a sellers' inventory of older dwellings, and developers and builders are "cut-price hasty" in wanting to recoup working capital, then regular homeowners face a much worsened situation.

Luckily, the US House Financial Services Committee which is chaired by Barney Frank of Massachusetts and has Minnesotan Kieth Ellison as a member, will work to relieve things, with the House Democrat party leadership pledged to take aim at housing problems poor and middle class families face today. If only Minnesota had another dedicated Representative in Washington aiming to also responsibly invest federal tax money for family housing prosperity, we would be far better off. But we lack any other person on committee with those true family values.