Foreclosures up locally, but it's too early to call it a trend


By Shonda Novak
Saturday, January 19, 2008

foreclosure signDamian Dovarganes
Despite a slowdown in recent months, the Central Texas market has fared better than most areas of the country. One analyst expects the area to see high levels of foreclosures for some time.
More Central Texans are feeling the pangs of foreclosure, and more pain could be in store.
Foreclosure postings for the Feb. 5 auctions rose 56 percent from the same month last year in four Austin-area counties — Travis, Williamson, Hays and Bastrop — according to the latest report from Addison-based Foreclosure Listing Service Inc., which tracks foreclosures in 20 Texas counties.
Williamson County had the highest gain among the 20 counties, up 98 percent. Its 301 postings were a county record and the first time its foreclosure notices have topped 300 in a single month, the report said.
Hays County's postings were up 57 percent, Travis County's jumped 38 percent and Bastrop County's rose 18 percent.
The 832 notices filed in the four counties is the second-highest number on record, the report noted. Foreclosure activity peaked in Central Texas in April 2004 with 844 notices.
Foreclosures have been rising nationally as the country remains mired in a housing slump, though the Austin area has fared better than most places despite some cooling in recent months.
The slowdown stems in part from lax lending practices in recent years that made it easy for many home buyers, especially first-time buyers, to qualify for mortgages. Many of those adjustable loans have or are resetting to higher rates, causing homeowners to fall behind on payments or end up in foreclosure.
In the Austin area, it's too soon to tell whether the latest numbers reflect "a temporary surge or anomaly, or ... a trend toward even higher foreclosure postings," said George Roddy, president of Foreclosure Listing Service.
Roddy thinks two factors are behind the surge: the New Year's holiday and lenders wanting to get loans off the books.
Ten percent to 15 percent of the postings filed in February would have been filed for the January auction had it not occurred on New Year's Day, Roddy said. However, that doesn't explain the entire gain because most counties saw increases that far exceeded 10 percent to 15 percent, he said.
Roddy thinks some lenders "simply made the decision to say, 'It's time to get these delinquent loans off the books.' "
He and other experts cautioned that one month doesn't make a trend.
"We need to watch the next several months carefully," Roddy said. "However, I believe we will continue to see foreclosures at high levels for some time and that we will periodically see these types of extreme surges."
David Reed, president of CD Reed Mortgage Bankers in Austin, has a different take.
"The number of foreclosures are certainly up; there's no doubt about that. But comparing year-over-year percentage increases won't always tell the whole story," Reed said.
"We've got more foreclosure postings, but we've also sold a whole lot more homes over the past three or four years. If you set records in the number of homes sold, you're obviously going to get the increase in foreclosure postings that go along with it."
Reed said that if Central Texas were "in the middle of a major price reductions — which we're certainly not — across the board for single family residences, I'd be more concerned. But I don't think you can make too much out of it. Personally, I think it's more of an indication of the sheer volume of homes sold."
Bonnie Brown, a spokeswoman for Roddy's firm, said she thinks a Bush administration-backed plan to freeze mortgage interest rates on adjustable rate loans for five years will be "only marginally helpful" locally because the plan covers certain subprime loans that were made between Jan. 1, 2005, and July 31, 2007.
In the Austin metro area, however, the average age of a loan posted for foreclosure in February was about 4 years old, she said. "There was a whole lot of lending between 2003 and 2005, so we've got a little ways to go, certainly a number of months, or maybe even a year, before the average home in the Austin area will even qualify for the plan," Brown said.

Mortgage troubles

Central Texas foreclosure postings for February are second-highest on record.

% change
Source: Foreclosure Listing Service Inc.; 445-3856

Original Austin American-Statesman article may be seen at
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