Foreclosures take break but mortgage concerns resurface 

Idaho trails much of the U.S. in foreclosures but is not immune from fresh U.S. concerns about weaker home sales and suspect creditworthiness among borrowers.

The state saw foreclosures drop 13 percent from the first quarter to the second, compared to a nationwide 2 percent rise, a recent report said.

But last week, national reports stated that sales of new homes fell significantly more than expected from May to June (6.6 percent), and that sales of pre-owned homes dropped by 3.8 percent. Mortgage lender Countrywide said continued weakness in the housing market, and borrower defaults and delinquencies, dragged second-quarter earnings. Wells Fargo said it would close its sub-prime, wholesale lending unit.
“There are definitely markets throughout the U.S. that are in worse shape than we are,” said Chuck Anderson, president of Northwest Mortgage in Coeur d’Alene as well as the Idaho Association of Mortgage Brokers.
But higher payments on adjustable-rate mortgages are impacting Idaho, he said.
“You see that everywhere (in the U.S.), where people didn’t take that time to repair credit are now in a situation where they are going to be stuck with these rate adjustments,” Anderson said.
Repairing credit could have helped them qualify for a mortgage refinance, he said. But refinancing now is tougher in general, particularly for people who borrowed 95 percent or 100 percent of a home’s value when prices were higher, he said.
Lenders already tightened their credit standards, Anderson said. “The market will fix itself over time. It always does.”
Idaho homes properly priced keep selling, but it could be some time next year before the market returns to traditional annual percentage gains in value, he said.
Carole Brawley, Banner Bank senior mortgage loan officer in Boise, said she remains busy but has made adjustments. She’s doing more Idaho Housing and Finance Association loans, which offer a lower fixed interest rate than many alternatives.
“With the current slowdown and price reductions, more first-time homebuyers have been able to get into the market,” she said. That segment shrank a couple of years ago as prices escalated.
Brawley said she is doing some loans on second homes in McCall and Donnelly.
Traditional transactions in the Boise area have been “slower, but there certainly seems to be enough to keep my pipeline going,” she said. Some buyers show interest in condos as a cost-effective alternative to single-family homes.
The number of properties in some stage of foreclosure dropped 13 percent in Idaho from the first quarter to the second quarter, Bargain Network (bargain.com) said in a report. Idaho posted fewer foreclosures as the second quarter wore on: 569 in April, 542 in May and 501 in June.
A nationwide 2 percent increase in foreclosures from the first quarter to the second quarter materialized on an increase of 6.4 percent from April to May and a drop of 11.9 percent from May to June, the report said.
Bargain Network said quarterly data suggest foreclosures continue to rise, but at a significantly slower rate than in the first quarter, when adjustable-rate mortgages and the first new of sub-prime mortgage problems contributed to a 20 percent jump.
In the second quarter, five states accounted for more than 58 percent of foreclosures, Bargain Network reported. Even so, national leader California posted a 7 percent decline.
Commercial foreclosures remained relatively low at 0.5 percent, the organization reported. States reporting increased filing activity included Idaho (6.1 percent), Wyoming (4.8 percent) and Delaware (4 percent).
Boise-based TitleOne Corp. in August 2006 opened a department that processes foreclosures for attorneys and lenders.
TitleOne Trust Officer Amy Wilcoxson said residential and commercial foreclosure activity has remained steady.
The company expects a gradual increase in coming months, if conversations with clients are any indication, she said. A strong economy should soften the increase, she said.
Comprehensive statistics on Idaho foreclosures are hard to come by because many trustees handle Idaho foreclosures, including entities based in other states, Wilcoxson said. Lenders in Idaho seem more reluctant than those in many states to work with borrowers on foreclosure alternatives, she said.
A notice of foreclosure is recorded in a county and published in a newspaper.
“The data is there to track each month. No one has found cause or a reason to want to do that,” said Lance Olsen, with Routh Crabtree Olsen. The Bellevue, Wash., firm is legal counsel to Northwest Trustee Services, which processes foreclosures in Idaho.
Idaho’s foreclosure rate is relatively modest, he said.
“I don’t see any explosive growth in Idaho the way that I have in some other jurisdictions,” Olsen said. “The Idaho rate is staying relatively constant.”
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To contact the author, e-mail brad.carlson@idahobusiness.net.

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