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Foreclosures in Sedgwick County hit a record in 2010, and several local experts don't see that coming down in the coming year, even if the economy were to improve.
There were 3,577 homes scheduled for foreclosure in the county during the year, a 15.8 percent increase over the 3,088 homes in 2009.
Several local experts pin most of the blame for the sharp increase over the past two years on layoffs, which turned affordable house payments into unaffordable ones.
Lawrence Volbrecht of Estates Unlimited, a firm often hired by banks to handle foreclosure sales, said he recently handled the foreclosure of a local couple who had lived in their house for eight years. They lost the house after both lost their jobs and then ran out of unemployment benefits.
"They went from a $90,000 home to a $450 a month trailer in Towanda," he said. "These are the kind of people who a year ago would be standing next to you at Dillons. Now they're on food stamps."
The subprime loan bubble caused havoc in 2007 and 2008, but has since largely worked its way out through the foreclosure system, Volbrecht said.
If the local recovery is slow, as many predict, Stan Longhofer, director of the Center for Real Estate at Wichita State University, said it could cause trouble. Many of the unemployed and underemployed are spending their savings to keep up house payments. They could exhaust their savings before new jobs open up. The Wichita unemployment rate is 8.4 percent.
"It really is about the employment situation," he said.
On the other hand, there are homeowners in Wichita who have stopped making house payments but continue to live in their house. Large national lenders are overwhelmed by the numbers of delinquent homeowners or have lost the documents needed to prove their ownership of the mortgage.
Lawyer Eric Bruce said he has a client who hasn't made a house payment since October 2006.
First, he said the client ran into financial problems and declared bankruptcy. After the bankruptcy closed, the bank filed to foreclose, but that takes nearly a year. When it got to trial, the bank dismissed the suit. Bruce suspects that the bank discovered it couldn't produce the documents. The bank will have to refile.
"I get a call from my client every now and then asking what's happening," he said. "I tell him you keep living there as long as it's not foreclosed on."
That house is part of what's been called "shadow inventory," houses caught in the limbo between the first delinquent house payment and the start of legal proceedings.
Bruce estimates there are hundreds of people in this situation. Even if the economy improves in 2011, he said, there is a sizable backlog of shadow inventory.
That's why, these experts say, the Wichita area foreclosure rate is unlikely to come down in 2011.
