Greene County foreclosures hit year-to-date record at 927

Gerald Lemon spends a lot of time these days on the steps of the Greene County Courthouse.

Lemon, a notary signing agent, acts as an independent trustee for law firms when they need to announce foreclosure sales in the Springfield area. Trustee sales are required to be announced publicly on the courthouse steps, and for six firms, that job in southwest Missouri falls to Lemon.

In November alone, he announced 68 sales in a seven-county area of southwest Missouri.

"Even in good times you're going to have foreclosures, but numbers are a little higher than usual," Lemon said.

Greene County posted 927 homes in trustee's deed sales - the last step of a home foreclosure - through the first 11 months of 2008, according to the office of the Greene County Recorder of Deeds. That's up 39 percent from the same period in 2007 and up 138 percent from 2005. And the growth is steady - every month in 2008 is up from its 2007 counterpart.

Writing on the wall

Kelly Edmiston, senior economist with the Federal Reserve Bank of Kansas City, said foreclosures are up in all the metropolitan areas of Missouri, like much of the rest of the country, though he noted that Springfield is still faring relatively better than the Kansas City and St. Louis areas.

Much of the problem has been traced back to subprime mortgages, given to borrowers with less-than-stellar credit who now have defaulted.

Lemon, who also acts as a notary at loan closings, said he noticed the problem several years ago.

"I would go out and close loans, and a lot of them were loans that people probably never should have gotten into to start with," Lemon said. "That's why a lot of them are in trouble."

The foreclosure uptick is continuing - and not necessarily in areas where more trouble might be expected.

Edmiston noted that in many parts of the country, foreclosure numbers are rising not only in the lower-income neighborhoods but also in higher brackets - and the issue has also spread to the prime mortgage market.

"That goes to show that the type of mortgage isn't the only problem we're facing," Edmiston said.

Rising unemployment rates mean more people will have difficulty meeting their mortgage payments, and stagnant or decreasing home values make selling the home on the open market to pay off the mortgage more difficult.

"Many (homeowners) had high loan-to-value ratios anyway, so they can't sell the home for an amount to pay off the mortgage," Edmiston said.

"And people with bad loans that have high interest rates are unable to refinance because credit is so tight," he added.

Avoiding foreclosure

As one of 30 certified loan mitigation specialists at Carol Jones, Realtors, Ronetta Rushing has noticed more people seeking to avoid losing their homes.

"We can help people talk to the bank if they need help with that - sometimes it's hard to get ahold of the right people to talk to," said Rushing, who's also a Realtor. "We can help them go over their options depending on the situation they're in. Foreclosure is the worst option - you don't want to resort to that unless you absolutely have to."

Rushing said that many banks are willing to work with the homeowner to offer some assistance and avoid losing their home, if the borrower approaches the lender at the first sign of a problem. Some banks, she added, also will let the borrower skip a payment, which is then added to the end of the loan.

Mike Booth, senior vice president of Ozark Mountain Bank, said he and other lenders can consider those options and others, such as taking interest-only payments for a few months while homeowners regroup or refinancing a loan over a longer period with lower monthly payments.

"The last thing we want to do is have to foreclose on a house - we're not in the real estate market, nor do we want to be," Booth said. "We want the customer to stay in the house and get back on their feet, and ... we'll go as far as we can to keep the customer in the house."

At the National Association of Realtors' national conference Nov. 9, the group touted the short sale option as a method of preventing foreclosure.

In a short sale, lenders agree to take less than the full amount owed on a mortgage, provided the borrower meets certain criteria.

"Homeowners who are struggling to make their mortgage payments must have more options available to them to avoid foreclosure," said NAR President Richard Gaylord, a broker with Re/Max Real Estate Specialists in Long Beach, Calif., in a news release.

The organization notes that Realtors can use their connections with the lending community to help facilitate the short-sale option.

Booth said that while he has not seen many short sales in this region, most banks could be open to the possibility.

"When a bank takes back a foreclosure, it's traditional that the bank will not get full price," Booth said. "If someone has an opportunity to sell their house at an amount less than what's owed against it, the bank may be willing to take that write-off up front rather than take the risk of owning the house and then trying to sell it. You just have to calculate which you think will be the bigger loss."

Regardless of the chosen solution, Rushing offered a key piece of advice for homeowners in trouble: Don't ignore the problem.

"The homeowner needs to make the bank aware that they're in a bad situation and that they can't make their payment," she said. "If they just ignore it and don't tell the bank anything, and then they're late, the bank is less likely to try to help them out. It's better to let the lender know right away that they're in trouble."

In Edmiston's view, the situation isn't likely to improve anytime soon.

"I had thought at one point that we may see some significant improvement in 2009, because a lot of subprime mortgages haven't been made since 2007 - they're almost gone," he said. "But with the significant decline in economic activity, I think the problem's going to stay pretty bad for a while."

But he can't say just how long the downturn might last.

"Where we go in the future is going to depend largely on overall economic activity, especially in the real estate markets," he said. "And it's hard to predict where that will go."[[In-content Ad]]