More local homeowners faced mortgage trouble in January

By David Falchek, The Times-Tribune, Scranton, Pa.

Mar. 9--More homeowners in the region have fallen behind in their mortgage payments or are facing foreclosure.

In January, about 6.9 percent, or one in 14 borrowers in the Scranton/Wilkes-Barre/Hazleton metro area, were 90 days or more delinquent on their mortgages, as more local homeowners faced dire economic circumstances and came closer to foreclosure.

Not surprisingly, foreclosure actions, in which lenders attempt to take possession of a home, increased as well -- to 2.5 percent of all mortgaged properties. That's up 2 percentage points from the year before, according to newly released numbers compiled by First American Core Logic, an independent real estate data aggregator.

One number in the recent report may signal a real estate market turnaround. The real estate owned rate, or REO rate, which is the percentage of mortgaged properties owned by lenders, is falling. In January, lenders owned 0.39 percent of mortgaged properties, down from January 2009.

Prices have fallen so sharply, said Mark Boud, owner of Irvine, Calif.-based research firm Real Estate Economics, that the market has shown signs of a turnaround and lenders stuck with foreclosed or delinquent properties are taking advantage of it.

"Banks are letting their properties out sooner and being more aggressive in giving out notices of delinquencies, and processing foreclosure," Mr. Boud said. "They think prices are firming and that the economy will show signs of a turnaround."

That's a far cry from a year ago, when lenders were overwhelmed with loans gone bad. Just as they were flooded with problem loans, they were cutting their own staffs to save money. With the real estate market frozen and their staffs down, lenders would let borrowers remain in their homes regardless of delinquency and be somewhat slow to start foreclosing.

Now, lenders have gotten their businesses in order and hired back some employees, Mr. Boud said. With sales of distressed properties increasing in some areas, banks are more anxious to foreclose and sell, he said.

For that reason, delinquencies and foreclosures may rise during some of 2010, but it will help the market find the bottom.

"When prices drop below a certain point, under any economic circumstances, a home will sell," Mr. Boud said. "People are realizing they will never see this opportunity again."

Local numbers for January were higher than statewide averages, but lower than national averages. Statewide, about 5.9 percent of homeowners were 90 days or more delinquent on their mortgages while 8.7 percent nationwide were. About 1.9 percent of homeowners statewide faced foreclosure while about 3.2 percent nationwide did.

Contact the writer: dfalchek@timesshamrock.comBy the numbers

In January, 6.9 percent in the local metro area were 90 days or more behind on their mortgages. Lenders owned 0.39 percent of mortgaged properties.

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