Foreclosures in Sedgwick County are up 60% over last year

Home foreclosures in Sedgwick County shot up during the first three months of the year, more evidence that financial stress levels in the community are growing.

More than 1,100 homes were scheduled for foreclosure sale by the Sedgwick County Sheriff's Office during the quarter that ended March 31.

That's 60 percent above the level of the first quarter of 2009 and a third higher than the fourth quarter. However, foreclosures in Sedgwick County remain about half of the national rate, and just a fraction of such housing bubble victims as Las Vegas and Miami.

There's no surprise as to why foreclosures are rising in Sedgwick County, say those who deal with foreclosures: layoffs, plus time.

A sudden drop in income from a layoff makes an affordable mortgage payment unaffordable, said Ryan Deitchler, housing counselor for Consumer Credit Counseling Service.

The most recent local unemployment rate, for February, was 8.1 percent, which is nearly twice what it was a year ago.

"They just don't have the income to make the payments," Deitchler said.

He said many homeowners at first see the problem as temporary — they use savings to pay the mortgage while they look for another job and/or put the house on the market.

The problem, say experts, is that finding a new job is hard these days, and so is selling a house.

If there isn't another income in the household, unemployment insurance probably isn't enough to make the house payment.

"I talked with a guy yesterday who has had a house on the market for a year and can't sell it," said attorney Frank Ojile. "And it's a $300,000 house."

Ojile, who represents banks and homeowners in foreclosures, said he's seen foreclosure move from a problem affecting largely aircraft workers a year ago to one affecting a broad range of professions and incomes.

Many get desperate as their money dwindles and start calling the bank to get their payments lowered.

Unfortunately, that's a long, complicated and, often, futile effort, say local experts.

First, most mortgages are no longer held by local banks, and are serviced by large banks such as Wells Fargo or Citigroup. Individual homeowners are dealing with vast bureaucracies at the end of a phone line.

"By the time I see them, they're pretty frustrated," Deitchler said.

The second issue, they say, is that banks have limited room to maneuver.

Renegotiating the terms of a mortgage loan typically means lowering payments by lowering interest rates or lengthening the payment period, rather than lowering principal. And banks can't do anything about escrow payment.

That can have an impact.

More than half of the homes that are scheduled for sheriff's sale are withdrawn by the mortgage company.

Sometimes that means banks have renegotiated the mortgage into a more manageable payment for the homeowner.

But it could also means a short sale in which the bank agrees to take a loss on the loan to allow a sale, or it may mean the homeowner just hands over the deed, leaving the bank free to resell the house.

Banks haven't been willing to drop payments dramatically, Deitchler said. If a homeowner experiences a long-term job loss, the bank often thinks it is better off foreclosing and putting the house on the market.

Consumer Credit Counseling, 316-265-2000, and Community Housing Services, 316-685-2656, among others, offer free counseling, but do not offer money.