Foreclosures fall in 2012 for Treasure Valley | Idaho Economy ...

One in about every 600 houses in Ada County got a foreclosure filing last month, according to national firm RealtyTrac.

In Canyon County, it was one in about every 430.

But the housing market is improving in the Treasure Valley, according to housing research firms such as RealtyTrac, which uses county records to measure markets.

The Boise-Nampa area has been ranked among the fastest-recovering housing markets in the country. Prices are on the rise and properties aren?t sitting on the market for as long.

A shift in ?distressed? home sales may play a large part. The local housing picture isn?t all rainbows after a long, dreary storm, though: Some distressed homeowners, including a Boise family, had an onerous experience selling their homes this year.

GOING SHORT

As of this month, short sales ? when a person sells a house for less than is owed on the mortgage ? were on pace to barely outnumber foreclosures in 2012.

Short sales can do less damage to a homeowner?s credit and to the real estate market by keeping the house from languishing as a foreclosure.

The shift away from foreclosed home sales was not subtle, based on real estate listings data provided to the Statesman by a local agent.

By the first week of December last year, about 2,100 homes had been sold ?short,? while about 4,100 had been sold as foreclosures.

By the same time this year, ?short? sales totaled about 2,200, and the number of foreclosed home sales had been halved, totaling about 1,900.

The difference was more obvious in the third quarter, when short sales were about the same as during the previous year but foreclosures were about one-third as common as during that period in 2011.

There are many possible reasons for this, said local real estate agents who work extensively with ?distressed? properties.

Coming into 2012, lenders declared it the year for short sales, said Rick Bennett, an agent with Keller Williams Realty Boise.

There just weren?t as many foreclosed homes on the market. Waves of foreclosed homes have already been sold, and some banks may be holding on to ?shadow inventory? ? waiting to put foreclosed homes on the market ? and taking longer to foreclose on people for various reasons, agents said.

And banks realized they could make more if they let a homeowner sell low rather than trying to sell a house themselves, often at a loss of tens of thousands of dollars, Bennett said.

?There was kind of a switch in thinking ... and a lot more cooperation with postponing foreclosure,? said Judy Trimble, a Realtor with Woodhouse Group in Eagle.

Banks have to approve short sales, and it?s a notoriously long process. One agent said it has taken his clients from 42 days to 19 months before keys changed hands.

Banks recently started to pre-approve short sales, giving buyers and sellers more confidence that their hopes wouldn?t be dashed, Trimble said. That was ?was almost unheard of? in years past, she said.

?It still isn?t easy? ? a short sale takes much more documentation and time than a plain vanilla home sale,? she said, ?and there are so many banks and so many little servicers, so it?s hard to generalize. But I think banks are seeing the benefit.?

INCENTIVES SET TO VANISH

Next year could be a tougher one for distressed homeowners, agents worry.

Unless a 2007 debt-relief law is extended by Congress, homeowners in distress might just file for bankruptcy instead of asking the bank to forgive a portion of what they owe.

That?s because if the law sunsets Jan. 1, as expected, the homeowner could owe taxes on whatever debt a mortgage lender forgives, as though it?s a kind of income.

Bennett said that the law?s change from this year ? no tax for up to $2 million of debt forgiven on a couple?s primary residence ? to next year is ?one of the biggest impediments we?ll see.?

Gary Kraus, a Realtor with Todays Real Estate Group in Meridian, said that rumblings of a Fannie Mae and Freddie Mac deal to rent out foreclosed properties could mean that foreclosures will become more common in the future.

For now, Kraus said, distressed sales make up about 75 to 80 percent of his business. ?I embraced them,? he said.

Canyon County seems to have a larger share of homes selling ?short? than Ada County does, but both counties seem to be running parallel when it comes to foreclosures, he said.

Kraus suspects that if a federal home loan modification assistance program isn?t extended, people who have trouble making mortgage payments could face higher odds of foreclosure.

The program ? Home Affordable Foreclosure Alternatives, or HAFA ? was created to help certain people out of a mortgage through a short sale or by transferring ownership back to the bank instead of losing it through foreclosure.

A LONG, STRESSFUL ROAD

The shift away from foreclosures didn?t mean it was a year of success stories.

It took Wayne Ross and his wife, Mikki, two years to get out from under a Meridian home they could no longer afford. They?d bought the house in 2006, and they both have jobs. But two years ago they predicted trouble with payments because of ongoing high-cost medical bills for their daughter and overall financial uncertainty due to the economy.

First, the couple tried to get a loan modification to lower their monthly payments. That took nine months and went nowhere, they said. So they applied for a HAFA short sale and were approved. Great, they thought ? until it was denied when they found a buyer. They felt lost in a labyrinth.

?You?re dealing with three different companies? with a financial interest in the house, Ross said. ?We lived in an apartment for almost an entire year while the house was sitting there ... we (moved) out so it was ready.?

They finally sold the house in April under a regular short sale ? without the HAFA benefits, like money for relocation ? earlier this year. Ross said the gap between what the house sold for and what they owed was less than $30,000.

If the bank hadn?t eventually approved the regular short sale, Mikki Ross believes the family would have been one of those foreclosure numbers.

They?re still in the penalty box with lenders: Like other short sellers, they?re unable to buy a house for a couple of years.

?We?re paying more for a rental than we would if we could purchase a house? this year, Wayne Ross said.

The Rosses said they?re grateful they had a team in their corner ? a paralegal, attorney and real estate agent ? and wish the process was less cumbersome for distressed homeowners.

The family plans to buy another house. But, Wayne Ross said, ?I sort of joke around and say not until I can buy it outright.?

Audrey Dutton: 377-6448, Twitter: @IDS_Audrey

Source: http://www.idahostatesman.com/2012/12/26/2392754/treasure-valley-foreclosures-fall.html

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