Foreclosures and bankruptcy filings in the North Olympic Peninsula continue to rise on the heels of the national home-foreclosure crisis.
Both Clallam and Jefferson counties have seen a significant increase across the board when compared with last year, with no end in sight.
In Clallam County, there have been 177 bankruptcy filings with the U.S. Bankruptcy Court since January, which is an increase of 42.7 percent over 2007. Last year 124 bankruptcies were filed in Clallam County.
During the same time period, 117 properties have been foreclosed and auctioned, according to the Clallam County Auditor’s Office. That figure is 138.7 percent higher than 2007, when 49 properties were auctioned.
“I’ve been involved in 40 foreclosure sales in the last two months,” said Terry Roth, a private auctioneer in Clallam County.
Roth said foreclosure filings are up roughly 25 percent this month so far when compared to November in Clallam County. He didn’t have exact figures available, but added that he posted five foreclosure notices on Friday alone, with properties ranging from $140,000 to $880,000 in value.
“This thing is striking across the board,” he said.
In Jefferson County there have been 81 bankruptcy filings with the U.S. Bankruptcy Court since January, an increase of 88.3 percent over 2007. Last year 43 bankruptcies were filed in Jefferson County.
Since January, a notice of trustee sale, which begins the foreclosure process, has been filed against 82 properties, according to the Jefferson County Auditor’s Office. That is an increase of about 28 percent over last year, when notices of trustee sale were filed against 64 properties.
Figures for auctioned properties for Jefferson County weren’t immediately available.
Adjustable-rate mortgages
Judi Morris, Jefferson County treasurer, attributed the rise to home buyers signing adjustable-rate mortgages that they couldn’t pay in the long run.
“I guess I’m not surprised when looking across the nation,” she said.
“But we are nowhere near as extreme” as other states.
Such mortgage loans, typically given to home buyers with less-than-desirable credit, have been widely attributed to the increase in foreclosure rates around the nation.
With those loans, the monthly payment rate increases over time, leaving some unable to meet the payments if their property values haven’t increased enough to refinance.
Roger Kelso, First Federal senior vice president, said people with either good or bad credit, who were trying to take advantage of the rising housing market of the early 2000s, were given risky loans by financial institutions. First Federal did not participate in such lending practices, he said.
When the housing market began to decline around 2007, more of those home buyers with adjustable-rate mortgages began to default on their loans – leading to the increase in foreclosure rates nationwide.
Morris said she expects foreclosure rates to remain about the same next year, since they have yet to decline.
“I hope it’s not worse,” she said.
Fewer purchased
While the number of foreclosures has increased, Roth said fewer properties are being purchased at the weekly auctions at the Clallam County Courthouse on Friday mornings.
Roth, who is also the president of the Port Angeles Downtown Association, said that with the last 31 properties he auctioned, only one has been purchased.
“A majority are going back to lending institutions,” he said.
“The housing market has literally collapsed as far as being able to sell.”
Hugh Haffner, a local bankruptcy attorney and Clallam County Public Utility District commissioner, said the increase in bankruptcies is tied to the upward trend in foreclosures.
This is due to home values declining — from the additional foreclosed homes being placed on the market — below what a person may owe on a second mortgage.
This leads to them declaring bankruptcy in order to avoid being sued by the lending institution for the second mortgage amount as well as to resolve credit card debt, he said.
Haffner said a solution would be to allow bankruptcy judges to adjust mortgages to meet the value of a home.
Haffner – who practices law in Clallam, Jefferson, Kitsap, Gig Harbor, Mason and Pierce counties – said his caseload has increased by about 50 percent over last year.
“It all started when gas prices went up,” he said. “People wanted to keep their lifestyle. . . . They went into their credit cards and at some point couldn’t afford to pay other debts.”
And, with the number of bankruptcy filings yet to level off, Haffner believes this financial storm has yet to pass.
“It’s going to get worse,” he said, adding that he believes it will take about three years for bankruptcy and foreclosure rates to return to normal.
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Reporter Tom Callis can be reached at 360-417-3532 or at tom.callis@peninsuladailynews.com.
