The Foreclosure Report

Austin Area Deals With 'Glut' Of Foreclosures

The Austin American Statesman has an update on defaults in that area. "A booming housing market helped Central Texas avoid another record year for housing foreclosures in 2005, but the number of people who lost their homes because of overdue payments remained high."

"After two years of essentially flat prices, Central Texas homes appreciated an average of 4 percent for the first 10 months of the year. That increase is giving financially troubled homeowners an escape from mounting debts."

"It's not just rising home prices that are enabling more cash-strapped homeowners to sell their houses. Last year's record number of foreclosures left lending institutions with a glut of homes on their hands. This year, banks have been more willing to allow homeowners on the brink of foreclosure to sell their houses and give the bank less than they owed. That's known as a short sale."

"'A lot of the banks are starting to promote and accept short sales in lieu of going through a foreclosure, primarily because it's less costly for the banks,' (broker) Peter Sajovich said."

"Although this year's decline in postings is a positive sign, the numbers remain high compared with just a few years ago. The number of postings in Travis County this year exceeded those in 2002 by 63 percent, while the number in Williamson County increased by 86 percent."

"Eldon Rude, director of a housing market consulting firm, said the relatively high number of postings in the past few years probably is a delayed effect of the tech bust, which wiped out thousands of jobs. 'There is a time lag between when they get into financial difficulty and the time their home gets in foreclosure, and it could easily be a couple of years,' Rude said."

"With the Central Texas economy once again growing, George Roddy said aggressive lending practices are emerging as a leading cause of foreclosure, as buyers put little to no money down and borrow money for closing and other transaction costs. 'Rather than seeing layoffs and the job issues as being the predominant source, we have seen that switch to the actual types of loans that are being made,' Roddy said."

"The number of postings involving cases where homeowners owed more than the house was worth increased more than 5 percent in Travis County during 2005 compared with 2004, and by 2.77 percent in Williamson County. 'I don't think there is going to be a rapid appreciation of properties,' said (broker) Rick Schulte. 'The ones that are in trouble the latter half of this year I think will probably still be there. I don't think you can count on a strong rebounding market to pull them up to at least the loan balance.'"

posted by Ben Jones @ 6:43 AM