Deschutes defaults spiked 228% in ‘08
Published: January 01. 2009 4:00AM PST
The number of Notices of Default — a document that initiates foreclosure proceedings — filed in Deschutes County more than tripled in 2008 compared with 2007, according to the county clerk’s office.
As of Wednesday, the last day of the year, 1,933 default notices were filed in 2008, an increase of nearly 228 percent compared with the 590 filed in 2007.
A Notice of Default is filed by a trustee after a borrower has defaulted on a mortgage, according to RealtyTrac Inc., which markets foreclosed properties online.
Deschutes County does not track actual foreclosures, and a notice of default doesn’t always result in foreclosure.
Homeowners can catch up on their payments or sell the home before it goes to foreclosure.
RealtyTrac has yet to release year-end data but reported in early December that one of every 535 housing units in Oregon received a foreclosure filing in November, a 4.36 percent increase from October and a nearly 143 percent increase from November 2007.
Across the nation
Nationally, RealtyTrac reported one in every 488 U.S. housing units received a foreclosure filing in November, ranking Oregon 12th in the nation for foreclosure activity during the month.
Nevada, Florida and Arizona ranked at the top of the list, respectively. California ranked fourth and Washington ranked 23rd.
Also in early December, the Mortgage Bankers Association reported the delinquency rate nationally for home mortgages as of Sept. 30 stood at nearly 7 percent of all such loans outstanding. The rate includes loans that are at least one payment past due but does not include loans in the foreclosure process, according to the association.
The association’s report on the fourth quarter of 2008 is due in March.
“The problems are compounding because people have now lost their jobs,” said Andy Zook, a co-owner of Arbor Mortgage Group in Bend.
“The overall economy has slowed tremendously, unemployment numbers are up and that means people are not making money, so not only have home values gone down and credit is tight and remains tight, but now people are losing their jobs … so I think we are going to see a high rate of them continue in 2009 — but due to a broadening set of reasons from what we saw in 2008.”
The road ahead
Zook said a second wave of foreclosure activity — this time from so-called Alt-A loans and Option ARMs, or adjustable rate mortgages — looms in 2009, although government intervention and historically low mortgage rates are likely to soften any blow.
According to the mortgage company Freddie Mac, interest rates for a 30-year fixed-rate mortgage nationally dropped to their lowest on record, according to its weekly survey.
“I think the government has tremendous incentive to keep rates low, to keep people in homes and to help find the floor (for home values) and to encourage new homeownership,” said Zook.
Zook said some people seeking refinancing are locking in rates under 5 percent. Those that can refinance — good credit, documented income and home equity of at least 20 percent are required — can save hundreds of dollars per month, and then turn around and sow that money back into the economy.
“That money is helping build consumer confidence and getting people spending again,” said Zook.
Michael Aid, a Realtor with Steve Scott Realtors in Bend who specializes in marketing bank-owned properties, said he believes foreclosure activity will continue apace in 2009 but is not likely to escalate, as long as the government steps in with some sort of relief.
“I think it could go either way depending on how the government deals with the larger economic problems because what we’re seeing is just the fallout from the economy taking a tumble,” said Aid.
“We have so much inventory, we need to reduce inventory before prices can go back up, so I would like to see a bottom this year, but, that’s a big picture look based on what the whole economy does.”
Aid said home sales are continuing in Central Oregon, albeit slowly. Aid also said that demand, either from first-time homebuyers or from people who want to move to the region but can’t because they can’t sell the home where they currently live, is continuing to build and will eventually start pushing people to buy.
The federal government has proposed limited help for ailing homeowners, as long as they live in the homes they have fallen behind on.
Zook said many homes in the area were purchased as rental or investment properties, therefore making them ineligible for any government aid. Zook said the government’s recent decision to begin buying mortgage backed securities will help to keep mortgage rates low, which will spur real estate activity at a grass-roots level.
Andrew Moore can be reached at 541-617-7820 or amoore@bendbulletin.com.
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