Wednesday, January 28, 2009

Foreclosure haunts valley residents

Loan modifications help some, hinder others

Express Staff Writer

Hailey resident Veronica Patlan recently refinanced her home to get some cash to pay medical bills, but the re-fi raised her monthly loan payments from $1,700 to $2,400 per month. Photo by Willy Cook

The failing economy and real estate market downturn have driven many people in the Wood River Valley into dire financial circumstances. With increasing debt levels and plummeting home values, hundreds are facing foreclosure.

Some finance and housing specialists in the valley are working to keep people in their homes for free. But sometimes distressed homeowners get into deeper financial trouble while they search for solutions.

The foreclosure process begins when homeowners cannot make the monthly payments they agreed to when they signed off on their home loans. After being noticed with default, a homeowner has 120 days to come up with the money, or the home goes to sale at auction and is lost.

"In the 1990s we used to see 20 of these defaults a year," said Blaine County Title President Daryl Fauth. "They were mostly cured by re-financing. Now we see 10 to 12 defaults per month."

Fauth said 80 percent of defaulting homeowners in the Wood River Valley are losing their homes. He said almost all of the homes are bought by the original mortgage lenders and put back on the market.

Fauth estimates that between 40 and 50 homes have been through the foreclosure process in the Wood River Valley since the end of 2007.

Ketchum real estate agent and former mortgage banker Tom Kennedy sold Kennedy Mortgage Group four years ago when he saw troubling signs of instability in the mortgage-backed securities market. He is angry about the recent $750 billion federal bailout of lending institutions, which he said is lining the pockets of bankers rather than helping people stay in their homes.

Kennedy has been working without pay for more than a year, helping people in the Wood River Valley avoid foreclosure. He studies loan agreements for an opportunity to negotiate lower monthly payments with a lender. In other cases he simply buys time until homeowners can sell their homes.

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