Some say the 40 percent drop has more to do with a moratorium and short sales than an improved market
By Diane Dietz
Thursday, Jan 12, 2012
Lane County foreclosure filings dropped by more than 40 percent in 2011, compared with the previous year, according to a national foreclosure tracking firm. But people familiar with the local housing market aren’t ready yet to say the market’s recovered, although they concur that foreclosures are decreasing, for a variety of reasons.
Some say the reduction in filings is because federal investigations brought foreclosures to a halt early last year — and the numbers will increase again in 2012.
Others say banks are OK’ing more short sales so homeowners can get out of bad financial situations by selling at a loss and avoiding foreclosure.
“The job market hasn’t changed that much, at least not in Oregon,” Gorilla Capital CEO John Helmick said. “We’re simply running out of bad loans to foreclose on.” Eugene-based Gorilla specialized in buying foreclosed homes, fixing them up and reselling them.
Lane County foreclosure filings fell to 1,379 last year, 42 percent lower than 2010, according to RealtyTrac, a California-based firm that tracks foreclosures nationally.
Oregon’s filings fell 39 percent, and U.S. filings fell 34 percent in the same period.
Eugene Realtor Barbara Thomas isn’t ready to cheer the declining rate; she sees the numbers popping up in 2012.
“The biggest factor was that basically there was a moratorium on foreclosures in the first part of 2011,” said Thomas, who is with RE/MAX Integrity.
Under federal scrutiny, Bank of America stopped foreclosures last February in Lane County, Thomas said. It took until August for the bank to restart the proceedings.
Today, Bank of America has 206 active foreclosures in the works countywide, Thomas said.
Realtor Kit Sixel, principal at Sixel Real Estate, isn’t offering the foreclosure bus tours she was earlier in the housing crisis. She said banks will no longer accept rock bottom offers to get foreclosures off the books.
But banks are more willing to make a short sale deal to head off a foreclosure, she said. “They’re really wheeling and dealing with short sales.”
Sixel said she considered doing short sale bus tours.
“There’s been so much action with the short sales,” she said. “But with short sales, there’s usually people living in the house and it’s intrusive to say ‘Hey, look at these people. They’re having problems paying their mortgage.’ ”
Helmick’s explanation for the drop in foreclosures is that the local market has worked through the greatest number of bad loans made from 2005 to 2007.
Some of those loans were given to homeowners who didn’t have income sufficient to support them. Other loans went sour because they were upside down — the loan was far greater than the house value — and the homeowner had to move.
Helmick said he’s paid $20,000 for a house that had a $200,000 loan before foreclosure. “I can see this being a $50,000 loan but, really, a $200,000 loan on an 1,100-square-foot house in the middle of nowhere?”
But, he said, the bulk of those houses have been through foreclosure — and the new buyers got “rock solid” loans, so foreclosures are tapering off.
At 1,379 filings, last year saw the lowest foreclosure activity in Lane County since 2009; but the filings were still twice the number in 2006, which was 585.
It will take some time to fall that far, Helmick said, but the market is making progress.
“Absolutely, we’re getting there,” he said.
Lane County Foreclosure Filings