Aug 22 2014
Alli Pyrah, Staff Reporter, Portland Business Journal
I’ve been reporting this week on two sets of figures which, at first glance, seem to tell contradictory stories about home foreclosures in our region.
Data from real estate buyer Gorilla Capital suggested that the Oregon housing market will be slower to recover due to a large number of foreclosure filings that have yet to be resolved.
Another set of figures, released by analytics company CoreLogic, suggests that in June, Mortgage foreclosures in the Portland-Vancouver-Hillsboro area were down to 1.65 percent.
So I tracked down John Helmick, the CEO of Gorilla Capital, to ask him about the apparent disconnect. According to Gorilla Capital’s figures, foreclosure filings in 24 counties Gorilla Capital tracked rose to 594 in July. There were 91 court foreclosures and 25 nonjudicial Notice & Sale filings in Multnomah County and Gorilla Capital predicts foreclosure filings will rise in August and September.
Helmick confirmed that my initial theory— that the two sets of figures indicate that foreclosures are finally catching up with us following delays — was correct. Legislation introduced in an effort to deal with unfair practices by lenders has, for the most part, merely “kicked the can down the road,” he said.
For example, changes to Oregon’s mediation law prompted a flood of requests for face-to-face meetings between lenders and homeowners with delinquent mortgages, slowing down foreclosures. The legislation was introduced to close the loophole that allowed banks to avoid face-to-face meetings with borrowers.
“When you’re behind on your mortgage payments by 20 to 30 months, it’s really hard to catch up,” said Helmick. “I wonder if people would have been better of having the foreclosure and a fresh start.”
Since foreclosures take a while to be processed, Helmick compared them to a pipeline. The figures I quoted from CoreLogic represent the foreclosures that are coming out of the pipeline, or those that have been completed. But the figures I quoted from his company represent the foreclosures that have just been filed, or the ones that are entering the pipeline.
The figures Gorilla Capital tracks are important because they are a good indication of what the foreclosure situation will look like in 12 to 18 months, and it’s worrying. Based on Gorilla Capital’s data, we should expect to see foreclosures rise dramatically.
Helmick said that of the homes his company researched, 87 percent were vacant when they were foreclosed upon. In most cases, the owners had long ago moved on with their lives. He would like to see those homes rehabilitated by private sector companies like his or charitable organizations like affordable housing nonprofit Habitat for Humanity.
“These zombie homes are sucking the values out of neighborhoods,” said Helmick. “Having a process that takes two or three years is nuts. We need to have a fast-track system for homes that are vacant. They are a blight on neighborhoods.”
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