Ada, Canyon home defaults, foreclosures expected to continue 

Default filings more than doubled last year in Ada and Canyon counties.
Ada County received 3,081 default notices, or foreclosure starts, compared with 1,433 in 2007, a release from IdahoDataProviders.com said. Canyon County’s 2008 total, 2,122, was up from 959.

Filings from November to December increased by 50 percent in Ada County and by 22 percent in Canyon County.
Still-sliding home values and continuing challenges to lenders’ best efforts to help cash-strapped borrowers probably will make southwest Idaho’s foreclosure problem worse before it improves,  IdahoDataProviders principal Charlie Nate said in an interview.
Government-sponsored entities Fannie Mae and Freddie Mac buy loans from mortgage lenders. “Fannie and Freddie are trying to modify these loans to help people out” by reducing interest rates and monthly payments, he said. Up to half of the modified loans could go into “re-foreclosure” within six months of the modification, he said.
Such modifications don’t reduce the balance that the borrower owes, Nate said. “It’s kind of like trapping the homeowner in an upside-down property.”
Many homeowners who face foreclosure and seek to modify loan terms are “upside-down” – owing more than the home is worth – at the outset, he said. But loan modifications that don’t reduce the principal will become more of a problem as more homes go up for sale and as prices decline, he said.
“Now there is so much more inventory on the market and so many more short sales being approved that it is kind of like a downward spiral,” Nate said. In a short sale, the lender agrees to accept a price less than what the borrower owes. Such sales drive down home prices, he said.
Mounting job losses and an abundance of five-year, adjustable-rate mortgages scheduled to reset in 2009 and 2010 will challenge the housing market in Ada and Canyon counties and will fuel continued default and foreclosure activity, he said. Tight requirements for credit approval also don’t help.
“All of these things correlate together to make 2009 look not too good,” Nate said.
Month-to-month increases in defaults – common as 2008 wore on – probably will continue this year, the IdahoDataProviders release said. The number of severe delinquencies, not including those already in foreclosure, is up by 50 percent from year-earlier levels, according to reports by credit reporting agency Transunion LLC.

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