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Troy Boucher lightly kicks away pieces of the front door lock he destroyed getting into a foreclosed split-level home along Buffalo DriveBuffalo Drive east of Shepherd.

Boucher is a broker and owner of Boucher and Associates. He said the mortgage lender hired him to clean up the home sitting on an acre of what used to be farmland and then get it sold for as much as possible.

After falling behind in their mortgage payments, the homeowners left, taking all the appliances, even carting off the propane fireplace in the living room. Old toy boxes were left piled in the garage being remodeled into a playroom for the kids.

“This is kind of typical. They sort through what they want and leave everything else,” he said.

While foreclosure isn't typical in Montana, with just 2 percent of all mortgages going bad, nationwide foreclosures jumped 65 percent during the third quarter, according to RealtyTrac Inc. However, due to a temporary foreclosure freeze by major lenders this fall, home repossessions dropped 9 percent from September to October. Still, lenders will repossess through foreclosure an estimated 1 million U.S. homes this year, or 10 times the normal number. And one in five U.S. homes are currently “underwater,” which means the mortgage exceeds the home's value.

Even though the Billings area is enjoying a relatively strong economy and has mostly dodged the dive in property values seen along the Flathead, Gallatin and Bitterroot valleys, more people in this area are falling behind in their mortgage payments. And in Montana, losing a home to a foreclosure sale can happen in as little as four months.

The sour economy is clearly affecting home sales, Boucher said.

“People can't make their payments if they don't have a job,” he said. “I think ultimately we're just going to see the pipeline for foreclosures continue or even increase.”

Losing the house

Since the economic bust started three years ago, Americans have watched their wages continue to stagnate, their retirement savings take a huge hit and their job security decline. The national jobless rate, officially at 9.7 percent, is actually closer to 16 percent if you count the people who stopped looking for work.

These pressures are contributing to home ownership hitting the lowest level in more than a decade. Home ownership, which is usually a family's chief investment, sat at 65 percent from 1985 to 1995 and then peaked at 79 percent in 2004.

By last summer, after the subprime mortgage crash, the U.S. Census Bureau said 67 percent of households own a home, down 12 percent from the peak.

Greater Las Vegas leads the nation in foreclosures with one in every 25 homes in trouble. In Nevada, a judge must approve foreclosures and the court cases have skyrocketed. So, Nevada has hired semiretired judges to help with the workload. For the past two years, Senior U.S. Bankruptcy Judge John Peterson of Butte has been traveling to Las Vegas and Reno to hear foreclosure cases.

Still, the U.S. home mortgage market remains annually an $11 trillion business, according to Bloomberg.

In Montana, one out of every 1,163 homes is in foreclosure, according to RealtyTrac Inc.

Even though home lending in this state has been conservative and no banks have closed, Montana Banking Commissioner Annie Goodwin called these times the most challenging the state's financial institutions have seen since the 1980s.

“Thank goodness Yellowstone County isn't hit as hard as Bozeman, the Bitterroot, the Flathead, but the impact is being felt,” Goodwin said.

Tracking foreclosures

Because Montana foreclosures are handled outside the court system, tracking the numbers is a little tricky.

Yellowstone County Clerk and Recorder Tony Nave said he recorded 519 notices of trustee or foreclosure sales through October. Of those, 369 of the sales were canceled.

Borrowers losing their homes to foreclosure must be legally notified of the sale at least 120 days before. They can use that time to sell their home and hope it brings enough money to pay off the mortgage. Or they can cancel the sale by getting current on mortgage payments, fees, penalties and legal costs.

A second way to track foreclosures in this state is through the number of Chapter 13 bankruptcies. This gives homeowners a back-door route to saving their home, if they can show a steady income and an ability to pay part or all of their debts over the next three to five years.

During the first 10 months of 2009, at least 281 Montanans filed for Chapter 13 bankruptcy, according to the U.S. Bankruptcy Court in Butte. This year through October, 333 people filed for Chapter 13.

People filing for bankruptcy don't have to say why. It could be due to a job loss, medical bills, addiction, gambling, a delinquent mortgage or unwise overspending.

Bob Drummond of Great Falls, a U.S. trustee specializing in Chapter 13 bankruptcies, said the statewide filings are up quite a bit from 2009.

“I'm guessing that just short of half of the (Chapter) 13s we get are filed to stop some kind of foreclosure,” Drummond said. “It's a pretty common tool to either sell the property or get current.”

Some borrowers, such as Susan and Michael Cochran, who live near Lake Elmo in Billings Heights, didn't seek professional help sooner because they thought they were negotiating a mortgage modification. Actually, they were headed off the foreclosure cliff.

Too little, too late?

In 1996, the Cochrans took out their first mortgage with First Interstate Bank and moved into their first home. A couple years ago, they applied for a second mortgage, a home equity loan with Wells Fargo, to pay off credit card debts and to make some home repairs.

Just before Christmas 2008, Michael, a heavy equipment operator, was laid off, and Susan, who works as a certified nursing assistant, also was temporarily unemployed for the holidays.

They started calling Wells Fargo trying to get their second mortgage modified, so they would have lower payments.

“I sent the 12-page application to them three times, but couldn't reach anyone by telephone,” Susan said.

They started missing payments in late 2008 and discovered too late that the loan officer they thought was going to help them keep their home was actually on another path. The loan officer turned out to be living in Hawaii and they had trouble reaching him. Had they known, Susan said they could have adjusted their calls for the three- hour time zone difference.

“They were still trying to be nice and work with us, but I thought this was a sneaky way of foreclosing,” Michael said.

Their house was sold at a foreclosure sale Dec. 29, 2009.The next month the Cochrans finally decided to hire Billings attorney Court Ball.

“I hope I can get their foreclosure undone because it's done now. Wells Fargo is the legal owner of the property,” Ball said.

In May, Boucher, who was hired by Wells Fargo to get Cochrans to move and get the home sold again, told them they needed to leave within 30 days because their home had been reverted back to the bank at a foreclosure sale.

“They never sent us anything saying we had foreclosure going. We got the paperwork from Troy (Boucher),” Susan said.

Wells Fargo Home Mortgage communications consultant Jason Menke in Des Moines, Iowa, said his company tried to reach the Cochrans about their home equity loan more than a year before the house was sold at auction.

“Despite our efforts to assist them, we were unable to finalize a modification,” Menke said.

Most of the Cochran's belongings are in storage. The roof has started leaking from the June hailstorm, but the insurance check was made out to the banks and Ball told the couple not to fix anything until the legal ownership is resolved.

“We don't know what's going to happen,” Michael said. “I can't fix it if we don't own it.”

Contact Jan Falstad at jfalstad@billingsgazette.com or 657-1306.

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Contact Jan Falstad at jfalstad@billingsgazette.com or 657-1306.

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City Editor

Chris Jorgensen is a city editor at The Billings Gazette. He oversees business, education and entertainment coverage.