10/06/2007

Associated Press

Lane County is seeing the rate of home foreclosures in the area growing faster than the rest of the state.

In the first six months of last year, 334 Lane County homes were being foreclosed on. Fast forward to this year, when that number almost doubled to 584 in the same time period, according to RealtyTrac, which maintains an online database.

And, as hundreds of Lane County homeowners stop making mortgage payments, their lenders are filing default notices against them thick and fast a first step toward foreclosure.

While foreclosures in Lane County are still low by national standards, they are rising faster than the country as a whole, or the rest of Oregon.

Foreclosures in Lane County increased 92.3 percent in July and August compared with a year ago. Statewide, they rose 52 percent in the same time, according to RealtyTrac.

Berri Leslie, manager of the mortgage lending section of the state Division of Finance & Corporate Securities, suggests that Lane County's biggest problem may be what most would consider a strength — high home values. That rapid rise from 2002 through 2006 may have forced some buyers into the riskier subprime market, she says.

Todd Williams, a principal in Portland's Evergreen Ohana Group and legislative committee chairman for the Oregon Association of Mortgage Professionals, says it makes sense that Lane County may have priced itself into its current situation.

"It has become what we call an unaffordable market," Williams says, explaining that the area's median income is not sufficient to afford a median-priced home. "When you have that situation and you have people who want to become homeowners, for the mortgage industry, it becomes incumbent on them to come up with some sort of products."

That has included subprime options such as interest-only mortgages, zero-equity mortgages and adjustable-rate mortgages in which low introductory rates are reset at much higher levels after a period of two or more years.

Real estate and mortgage professionals agree that the local housing market remains sound, with a steady influx of new residents and mortgage interest rates that are still low by historical measures.

But with foreclosures on the rise, locally and nationally, lenders are feeling pressure to tighten up on loose credit standards that brought unprecedented numbers of first-time homeowners into the market during recent years.

Williams, legislative chairman of the Oregon Association of Mortgage Professionals, says the state's real estate market has remained viable because of a combination of steady population growth and "fairly restrictive" urban growth boundaries that limit the supply of homes in areas such as Portland and Eugene.

"Our real estate values are stronger than anyplace else in the nation, and probably will remain that way," he says.

That means those who run into mortgage problems will most likely be able to sell their homes, if necessary, to get out from under their debt, Williams says.

And a homeowner who gets behind on a mortgage has nine months, or longer, from the time he makes his most recent payment to the time when the home is gone, Williams said.

"If you are in an adjustable rate mortgage and don't think you'll be able to afford the payments once the rate resets, contact your lender now," says Leslie, of the state Division of Finance & Corporate Securities. "And if you're already delinquent, contact your lender now."

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Information from: The Register-Guard, http://www.registerguard.com