Thurston County recorded 1,432 foreclosure notices in 2009, a 36 percent increase compared with 2008. It was the fourth consecutive year in which the county has experienced a year-over-year increase in the number of people falling behind on their mortgage payments, according to county auditor data compiled by The Olympian.
Last year’s increase in foreclosure notices, also known as notices of trustee sale, was attributed to a number of factors, including job losses, adjustable-rate mortgages and falling real estate values, South Sound real estate professionals said Wednesday. And although there are signs that the economy is improving, some predict the state’s foreclosure problem will be worse this year than in 2009.
In Thurston County, foreclosure notices rose to 1,432 last year from 1,049 in 2008. That year-over-year increase wasn’t as sharp as the 60 percent increase from 2007 to 2008, but it still was well above foreclosure levels during better times for the South Sound housing market, such as in 2006 and 2005. In 2005, the county recorded 423 foreclosure notices, auditor data show.
The notice of trustee sale document is a step in the overall foreclosure process that can take three or four months before resulting in an auction at the Thurston County Courthouse, said Alan Swanson, a longtime Olympia attorney familiar with the process.
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Once a borrower is behind on his or her mortgage payments, the lender typically contacts him or her to discuss the delinquency and work out an arrangement. If that fails, the notice of trustee sale emerges, notifying the borrower that he or she has a limited amount of time – typically 90 days – to make good on missed payments and any related costs or fees, Swanson said.
If that doesn’t work, the property is put up for auction, and if it fails to attract a buyer, it becomes the lender’s property.
“Most lenders want to work with (borrowers) rather than just proceed arbitrarily to foreclosure,” Swanson said. “(Lenders) want the note paid; they don’t want the collateral.”
Doug Burger, owner and broker of the real estate business Burger Professionals of Olympia, said the number of foreclosure notices likely was higher last year because of job losses and adjustable-rate mortgages, which are mortgages with an interest rate that adjusts higher over time. For example, a couple who bought a $250,000 house with an adjustable-rate mortgage of 3 percent or 4 percent could afford the monthly payment at one time, but things change when it comes time for the rate to adjust to 7 percent or higher, Burger said.
“They just can’t make it,” he said.
Burger said his office has picked up 15 listings in the past few weeks, about 20 percent of which have been foreclosures or short sales, property in which the lender has agreed to accept less than the value of the mortgage.
The outlook for foreclosures in the state doesn’t get any rosier this year, Washington State Employees Credit Union President and Chief Executive Kevin Foster-Keddie said. In addition to foreclosures resulting from divorce or medical expenses, there is the continuing combination of foreclosures resulting from unemployment and falling real estate values, he said.
Rolf Boone: 360-754-5403