Whatcom County foreclosures keep rising

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• TELL YOUR FORECLOSURE EXPERIENCE

  While the number of home foreclosures in Whatcom County has been small, the number appears to be rising.
  Nationwide, home foreclosures are threatening millions and raising concerns about massive losses for the banks that issued the loans.
  The Bellingham Herald is looking for people who are facing foreclosure, or who have recently lost a home to foreclosure. If you are willing to share your experience, contact reporter John Stark at 715-2274, or john.stark@bellinghamherald.com.

For Whatcom County, foreclosure notices were filed on one out of every 592 homes in the second quarter. Across the entire state of Nevada, the second quarter foreclosure rate was one out of 43. For California it was one out of 65, according to RealtyTrak.

At the municipal level, Stockton, Calif., has been the hardest-hit. In that city, one out of 25 households got a foreclosure notice in the second quarter alone.

Nationwide, the foreclosure rate is one out of 171. Statewide, it's one per 350.

Will foreclosures keep on rising here?

One real estate agent, RE/MAX Whatcom County senior sales associate Kristi Coy, cautiously predicts that foreclosure rates will level off for the rest of the year.

"Nobody really knows, but my take is that this is probably the height," Coy said. "Probably it will not get worse."

As she sees it, the local real estate market peaked a little less than three years ago, in August and September 2005. At the peak, investors and speculators provided a significant part of market demand, and lending practices were at their most relaxed.

For a while, Coy said, lenders were approving loans as high as 125 percent of a home's appraised value. Both lender and borrower made those kinds of deals in the belief that home prices would continue to soar.

"Even lending 100 percent is a dangerous practice, I think," she added.

Since then, Coy said, lenders have tightened up their standards, contractors have stopped building spec homes, and investors have stopped bidding up prices, bringing the market back down to normal levels of activity.

Some of those who borrowed too much and paid too much during the peak are now facing foreclosure - unable to afford mortgage payments and unable to refinance a home that may now be worth less than the buyer owes. Coy thinks the current small wave of local foreclosures is the fallout from the overheated market of three years ago, and foreclosures could start to taper off before the end of 2008.

Susan Templeton, loan officer and owner of the local office of Loannetter, said the nationwide tightening of credit markets has not spared Whatcom County: Credit markets remain volatile, mortgage rates fluctuate daily, and many borrowers face stiffer requirements for down payments and mortgage insurance.

"They (lenders) are really risk-averse," Templeton said. "They see people getting overextended, and they're worried."

That can mean roadblocks for people hoping to refinance their way out of financial difficulties, making it harder for some people to avoid foreclosure. But Templeton said there are still options for most people.

"I don't see a lot of really desperate people right now," she said.