2011 ended with the lowest total of housing foreclosures in Sedgwick County since 2007, according to foreclosure filings with the Sedgwick County District Court.
There were 2,088 filings for foreclosure in Sedgwick County District Court, down about 500, or 20 percent, from the peak in 2010.
The main reason, say experts, is a slowdown in the push by banks to process foreclosures, rather than a sudden improvement in the health of the pool of homeowners.
Banks grappled all year with fixing their processes for filing foreclosures. The problem stems from the housing boom when most banks sold their mortgages to Fannie Mae or Freddie Mac, which turned the loans into bonds for investors.
The banks hired to service the mortgages didn’t always keep track of the required paperwork or observe the legal requirements needed to foreclose in many states. After heavy criticism and fines, the largest banks slowed down the speed at which they pushed delinquent homeowners into foreclosure.
It’s been a nationwide phenomenon, particularly in states — such as Kansas — that require foreclosures to go through the court system, said real estate analytics firm RealtyTrac.
“The lack of clarity regarding many of the documentation and legal issues plaguing the foreclosure industry means that we are continuing to see a highly dysfunctional foreclosure process that is inefficiently dealing with delinquent mortgages — particularly in states with a judicial process,” said RealtyTrac CEO Brandon Moore in a statement.
The company reports that the state of Kansas saw a drop in the foreclosure rate of about 23 percent, to about 8,800 total. That meant that one of out every 140 houses was in foreclosure.
A second key to the foreclosure problem is falling home prices. Many homeowners bought houses using little or no equity during the boom. If they ran into financial problems — lost a job, suffered large medical bills or a divorce — and could no longer afford the house, they may not have had much incentive to bargain hard in order to sell the house. As home prices fall, a seller without equity would actually have to bring cash to the closing in order to pay off the mortgage.
Others just couldn’t find buyers in a weak market. In either case, they let the house go back to the bank.
But many experts have said they don’t necessarily think the underlying economic situation pushing homeowners toward foreclosure will improve that much in 2012.
Moore thinks that the big banks are moving to push more homes into foreclosure this year.
“We expect that trend to continue this year, boosting foreclosure activity for 2012 higher than it was in 2011, though still below the peak of 2010.”