While Missoula hasn't experienced the housing crisis to the same degree as other parts of the country, some people have fallen behind on their mortgages or anticipate trouble in the coming months.
About 20 local residents attended a foreclosure prevention clinic last week hosted by Missoula nonprofit homeWORD. Some wanted to know the options when their adjustable-rate mortgages reset to a higher interest rate. Others, who face a temporary money crunch because of medical issues, layoffs or divorce, wanted advice on how to hang onto their homes.
State and federal housing officials, as well as local bankers, offered advice on budgeting, refinancing and negotiating with lenders.
Maureen Rude, operations director at NeighborWorks in Great Falls, said foreclosure counselors help find the right person to make a decision on a delinquent loan. Given the enormity of the mortgage crisis nationwide, she said some lenders are willing to negotiate - for example, by freezing a loan's interest rate - rather than have the property go into foreclosure.
She said foreclosure is difficult for people to confront, and too often they don't until it is too late.
“It is really hard for people to talk about foreclosure. They feel uncomfortable and embarrassed and don't want to tell people how they messed up on their home loan,” she said. “But if we catch them early, we can help them out.”
Jeannene Maas of the Montana Board of Housing said the state has been spared the housing collapse felt elsewhere in the country - where there is a greater prevalence of subprime loans, speculation and over building.
“As I've been told, if the nation is experiencing a tsunami in foreclosures, then Montana is up to its ankles,” she said.
Critics have said borrowers were put into subprime loans they didn't understand, couldn't afford and were unable to exit.
The effects have been felt unevenly across the country. In Montana and some other states, the impacts are less because lenders were more conservative about the types of loans they offered.
But the state of Illinois last week sued Countrywide Financial, one of the largest lenders in the state, claiming the lender defrauded borrowers by selling them risky loans that rapidly ended in foreclosure.
In California, Nevada and elsewhere in the country, speculators and investors contributed to the run up in home prices and hoped to “flip,” or sell the home after they realized a financial gain.
Maas said the foreclosure process in Montana moves quickly, often in just five months. So early intervention is crucial for people who face financial troubles.
In Missoula County, there were 68 notices of foreclosure for the first quarter of 2008 as compared with 58 in the same period last year, according to Debbe Merseal, chief deputy clerk and recorder for the county. Of course, not all of those cases ended in foreclosure.
However, those numbers appear to be slowing slightly. For the second quarter through June 14, there were 65 notices of foreclosure as compared with 71 for the same period in 2007.
Local concerns about foreclosure mirror the national outlook. Congress is working out details of foreclosure rescue packages for distressed homeowners.
The Senate's mortgage relief plan, which stalled last week, would let the Federal Housing Administration back about $300 billion in new loans for distressed homeowners who wouldn't qualify otherwise for government-insured, fixed-rate loans.
Declining home values make consumers less likely to spend, which impacts retail stores, other businesses and puts a damper on the economy.
Some people in western Montana are teetering on the edge of foreclosure because they opted for subprime loans. Typically, the loan's initial “teaser” rates are fixed for several years and then adjust to higher rates, leaving some people unable to afford the higher payments.
In mid-July, the federal government is expected to offer several FHA and Fannie Mae mortgages to assist people whose adjustable-rate mortgages will reset or who have delinquencies because of extenuating circumstances.
“Every situation is different and needs to be examined on a case-by-case basis,” said Lynn Stenerson, real estate loan officer with First Interstate Bank in Missoula.
Foreclosure prevention counseling helps people develop a spending plan, work out solutions with their lenders or capture the equity in their homes through a sale before a foreclosure mars their credit.
Rude said she spoke with someone at the clinic who lost their job and found another lower-paying job, but had fallen behind on their mortgage payments.
Rude said people in those circumstances - who have the ability to make payments on both their current loan and can squeeze a little bit of income from careful budgeting - might qualify for a “foreclosure prevention loan” that has interest rates as low as
1 percent.
Huber said the clinic helped educate people about the foreclosure process. She said homeWORD will advocate with lenders on the behalf of the borrowers.
“We accomplished our goal and were able to have some people come and get the answers they needed,” she said.
Maas suggested people with questions call NeighborWorks at 1-866-587-2244.
“My biggest concern is people who are in trouble putting their head in the sand and not making that first phone call for help,” she said.
Reporter Pamela J. Podger can be reached at 523-5241 or pamela.podger@missoulian.com.
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