Mortgage defaults rise again

Default filings in Ada and Canyon counties set another record high in July.

IdahoDataProviders.com reported that loans on 478 homes in the two-county area entered into default in July. The first seven months of 2008 saw 2,710 defaults recorded, up from 1,129 default notices in the year-earlier period.
“The month of August could very well set another record, when as many as 500 homes in the Treasure Valley could enter into foreclosure as billions of dollars in option-ARM mortgages and five-year Adjustable Rate Mortgages begin to reset earlier than predicted by the national experts,” IdahoDataProviders.com President Charlie Nate said in a release.
Ada County saw 261 default notices filed in July. That total matches the all-time high for a single month, set in April of this year, reported by IdahoDataProviders.com. Default notices in Ada County totaled 224 in June 2008 and 127 in July 2007.
Canyon County recorded 217 default notices last month, the highest one-month total ever in the county. Defaults in the county totaled 165 in June 2008 and 67 in July 2007.
Nate said the new foreclosure numbers support IdahoDataProviders’ position that the number of Idaho homes entering into foreclosure will continue at this record pace through the end of 2008.
The company in June reported that the local market had 720 active short sales, according to the Boise-based Intermountain Multiple Listing Service. The total increased to 867 by July 2 and to 1,002 by Aug. 6.
“More importantly, while short sales now make up over 12 percent of the currently listed and active properties in the local market, they are a staggering 32 percent of pending sales,” Nate said.
Short sales occur when delinquent homeowners have no equity or even owe more than their home is worth. The lender agrees to accept less than the total amount due as full payoff. Nate said short-sale homes often sell for 10 percent to 20 percent less than current market values.
He said he expects the rapidly increasing number of short sales to result in a decline in home prices in the local market in the coming months as lenders continue to approve short sales below current market values. This will force home sellers to drop their asking prices to compete against these discounted homes, he said.