Hundreds Living on the Brink of Eviction

By Beacon Staff

This is the first in a three-part series on rising foreclosures in the Flathead Valley.

In the past six months, the job description for homeownership counselors at the nonprofit Community Action Partnership of Northwest Montana has shifted dramatically: from helping people buy a home to helping them cling to the one they already have.

“I would say they’re probably seeing at least as many people in danger of foreclosures as they are first-time homebuyers – or more,” Lil Dupree, an administrator at CAP of NW MT (formerly Northwest Montana Human Resources), said.

As the recession continues to hammer the Flathead Valley, more of its workers are facing sudden reversals in financial stability because of layoffs and reduced hours. As a result, an unprecedented number of homeowners here are falling behind on their mortgages and finding themselves in serious danger of losing their homes.

To be sure, the Flathead is no Arizona or California. But the financial and emotional strains that surround a foreclosure are still palpable here, as families struggle to regain their financial footing and the real estate market shifts. And for such a small population, the numbers are striking.

In the first six months of this year, 459 notices of trustee sales were filed with the Flathead County Clerk and Recorders office. That’s just 18 shy of last year’s total.

“Unless foreclosures stop dead in the water, we’re going to far surpass even last year,” Dupree said, “and that was a huge year.”

In fact, last year’s notices were up almost 65 percent from 2007. Four years ago, there were only 158 notices of trustee sale in the county. There were 99 in June of this year alone.

A notice of trustee sale is one of the first steps of the foreclosure process, and must be filed at least 120 days before the actual sale. Not every homeowner who receives a notice goes all the way to foreclosure; some are able to pull together the money owed and recover before the process is complete.

However, since it means a loan is in default, the notices are a strong indicator of how many homeowners are struggling with their payments. “By the time they get to the notice they’re usually in a pretty bad situation,” Dupree said.

So far this year, 132 notices of trustee sale have been canceled, or about 29 percent. That’s significantly fewer than last year when 51 percent were nixed, and dramatically less than previous years when as many as 85 percent were dropped.

Oddly, though, that doesn’t necessarily mean all the notices that aren’t cancelled are going to foreclosure. County statistics show there were 79 trustee sales in the first five months of this year. Compare that to a similar time frame last year when there were 59 trustee sales and that’s only a 34 percent increase – significantly lower than the percentage increase in notices.

“So far this year, it looks like the lenders have been starting the foreclosure procedure, but have not been following through with the final foreclosure actions,” said Jim Kelley, a Kalispell-based appraiser who keeps detailed statistics on the valley’s housing market.

Local real estate professionals say short sales and deed-in-lieu-of-foreclosure actions are also on the rise. These proceedings require borrowers to give up their homes to eradicate their mortgage debts, generally for less than the full amount due. Selling a home or handing it back to the bank in this manner does less damage to a borrower’s credit rating than a foreclosure, and can be less of a hassle for the lender.

Last week, MLS listings showed 61 short sale properties on the market in the Flathead Valley. “We didn’t see any two or three years ago,” Kristi Bruyer, an agent with Chuck Olson Real Estate in Kalispell, said. “It was a rarity.”

While much has been made nationally of predatory loans and homebuyers with poor spending habits, Dupree said that’s rarely the case for someone seeking help in her office. Instead, as CAP counselors see more and more “average folks” come in, they realize that a slight change in circumstances could put them on the other side of the desk.

“The fact is now that it’s any of us,” Dupree said. “It’s my husband taking a pay cut; it’s our friends and colleagues and neighbors – folks with normal mortgages living within their means.”

“Between the economy nationally and local layoffs, there’s plenty of people who haven’t made any mistakes,” she added.

As a Housing and Urban Development affiliate, the foreclosure prevention counseling services at CAP, located in downtown Kalispell, are free. The agency serves the four counties of northwestern Montana – Flathead, Lake, Lincoln and Sanders – and can offer assistance online or via the phone or fax for those unable to travel. The earlier people contact the office, Dupree stresses, the more the agency can do to help.

To deal with the increased load, CAP has added three new counselors in the past six months, putting them through extensive training to be up for the task. Nothing, however, could probably prepare them as well as the flood of 80-plus foreclosure cases flowing across their desk.

“One of the first things we tell people,” Dupree said, “is that we are so sorry and, not to minimize your trouble, but you need to know you’re not alone.”

Stay Connected with the Daily Roundup.

Sign up for our newsletter and get the best of the Beacon delivered every day to your inbox.