COLUMBIA – Boone County has not seen a break in the wave of housing foreclosures, and 2010 is on track to be a record year.
According to the Boone County Recorder of Deeds, 2010 has seen more than 250 housing foreclosures through August – 28 percent more than in 2009 through August.
"We're at a record-setting pace," Tom Schauwecker, Boone County assessor, said. "We're going to surpass three prior record years."
The Recorder of Deeds' foreclosure numbers, however, do not tell the entire story.
An analysis in February by Schauwecker found that though the Recorder of Deeds' office filed 298 trustee deeds of foreclosure, it reported 348 warranty deeds in lieu of foreclosure.
"Warranty deeds are what happens when a developer or owner says to the bank, 'You know, I'm behind on my payments, so here – I'll just give you back this property,'" Schauwecker said.
Although warranty deeds are useful for banks and developers, they make it difficult for the public to know the extent of distressed properties in Boone County.
One must examine each warranty deed, around 5,000 annually, to find how many are in lieu of foreclosure because they are coded the same way as any other warranty deed in the recorder's office.
If 2010 foreclosures continue at the current pace, Boone County could end 2010 with 375 foreclosures – a 20 percent increase compared to last year and by far the highest on record.
Greg Harmon, a broker and salesman with RE/MAX Boone Realty, attributed some of the rise in Boone County foreclosures to loan modification programs that allowed lenders to "put off" foreclosures for years.
"All they've been doing is postponing foreclosures," Harmon said. "If you had a two-year loan modification back in '08, then that comes due right now. If your financial situation hasn't changed since then, you might have to foreclose."
Harmon said he thought the loan modifications were designed to help ward off foreclosures.
"The loan modifications have done little to help people," Harmon said. "The banks just wanted to put off the hit. They didn't want it all at once. It would be a nightmare."
According to an analysis by RealtyTrac, one in every 381 housing units in the U.S. received a foreclosure filing in August 2010. Almost 2 million homes in the U.S. were in foreclosure.
Chris Sanders, loan officer of Allied Mortgage Group, warned that the rate would "continue to go up."
"There are still a lot of homes and consumers in a sub-prime arrangement," he said.
Sanders pointed to adjustable-rate mortgages, where consumers can choose to pay less than the minimum balance in exchange for "negative amortization," in which unpaid interest is added to the outstanding principal.
Adjustable-rate loans were also notorious for their teaser rates, often as low as 1 percent, which jump to a much higher rate after a set period.
"If you look at the years '05, '06, '07, there were a lot of people going into 100 percent loans with little income, little credit, and now those rates are adjusting," Sanders said. "The next three months is when a lot of these rates will adjust. Many of these are five-year forecasts, and so the ones that were put out in 2005, those are due for realignment this fall. These are really wicked."
Despite the discouraging numbers, Sanders said Allied Mortgage Group hasn't seen "an alarming rate of foreclosures, but the community as a whole has. Though Columbia wasn't a huge sub-prime market to begin with, there were still consumers with unverifiable incomes who were given these loan products."