January saw a 45 percent jump in the rate of foreclosure across Wisconsin, compared to last year. The economic and mortgage problems continued, affecting the real estate market. The Milwaukee based website, ForeclosureWl.com released data, according to which the foreclosure rate was up by 50 percent in Milwaukee County, and 80 percent in Dane County. The president of the company, Robert Jansen said that the rate of foreclosure would remain high in 2008 and some experts had predicted that the situation would not improve before 2010.

The number of foreclosures all over the state was 2,443 in January 2008 and the daily average was more than 116 per every single business day. The maximum number of foreclosures were in Milwaukee County, where the figure was 616, followed by Dane County at 124, Racine at 116 and Brown at 111. In January there was a rise of 69 percent and a fall of 23 percent in the rate of foreclosure in the Wisconsin counties. There was no change in the rest.

The president of the Greater Milwaukee Association of Realtors in Wauwatosa, Mike Ruzicka, said that he had assumed that the foreclosure rate would come down by 2009 as problems in lending and subprime mortgages came to a head during last summer. He had noted that a number of mortgages under those categories often faced balloon payment or interest reset in the coming months. He further says that they had assumed a period of 18 months to put things in order. To Jansen, nothing seems to have changed. According to him, resets in adjustable and subprime mortgage rate, results in a marked increase in the monthly payments of mortgage of a number of home owners.

Also, since the real estate market had cooled down and there was an overall increase of the numbers of homes in the market, the situation became more difficult for people who were trying to sell off their homes in order to avoid a foreclosure. However, Ruzicka had observed the fact that, the market was able to absorb the foreclosures and the prices were not affected as such. It is expected that some data on the pricing of these properties which are sold by Realtors, would be made available officially by next week. Ruzicka feels that the situation seems to be improving in January. January generally marks a good beginning because this is the time when people who are buying houses for the first time, venture out to the market.

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Area loan officers of Southern West Virginia and Southwest Virginia declared that as the banking there was more conservative and stuck to more traditional practices, the region was able to avoid the mounting rate of foreclosures that was breaking out all over the nation.

An increase in the adjustable interest rates on subprime mortgages in 2007, left the investors who were financing new homes under that scheme, in great trouble. According to loan officer, Mike Day, who is associated with MCNB Banks, the consumers had thought that they would always be paying $400 as monthly mortgage and had thus signed up for the loans, but to their utter dismay they found the monthly mortgage rising to $650, which put sufficient strain on family budgets and ultimately led to foreclosures. Day goes on to say that, over and above all this , the price of gasoline and natural gases are also rising and thus the financial conditions were quite tough. But Day, as well as representatives of various other banks from that region remarked that in spite of all these different problems they have not noticed any marked increase in the volume of home foreclosures.

Lawrence Reed, Collection’s Manager, Bank of Tazewell County says, that they haven’t seen any increase in the rate of foreclosures as the bank follows a pretty conservative policy. He adds that, conservative products help in going through tough times. According to the director of secondary mortgage lending, First Century Bank, Hal Absher, the act of abstaining from subprime loans had once seemed a dumb move but ultimately it proved to be a pretty smart move. Absher further says that they have been conservative lenders, so they have stayed away from subprime loans and as a result they did not witness the hike in foreclosures.

The area bankers always keep one vision in mind ; that is, on the 1^st of September, 1999, the National Bank of Keystone situated in McDowell County, which happened to be one of the most big financial failures ever since the Great Depression, collapsed. Lawrence Reed remarked that this incident was an example of what could happen if banks followed unquestionable practices. He also said that whenever local banks think that some scheme for getting rich quickly is developing, they tend to fall for that and in the process somebody or the other tends to get burned. Thus following a conservative policy is definitely a foolproof measure of preventing foreclosures.

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Sticking with more traditional banking practices while institutions in other parts of the nation tried riskier loans has helped southern West Virginia and Southwest Virginia avoid the rash of mortgage foreclosures dampening America’s economy, area loan officers said.

In 2007, investors who financed new homes by getting subprime mortgages with adjustable interest rates began to have problems making their monthly payments when the interest rates on them increased. Since then, the foreclosure issue has been the focus of many debates and economic forums. With interest rates at their peak, things were not looking too rosy for home owners in the long run.

Mike Day, a loan officer with MCNB Banks, said consumers with such loans might have signed up thinking they would always be paying $400 on their mortgages each month, only to see these payments jump to $650 a month. Such increases can tighten family budgets and lead for foreclosures.

“On top of that, gasoline prices are on the rise and natural gas prices keep rising. Everything is on the rise,” Day said. “It’s a tough world to be in financially now.”

However, Day and representatives of other banks in the region said they have not seen an increase of home foreclosures.

“Really we haven’t seen any, mainly because we don’t deal in those loan packages,” said Collection’s Manager Lawrence Reed of the Bank of Tazewell County. “We’re still a little more conservative. Past conservative products carry you through the tough times.”

Hal Absher, director of secondary mortgage lending for First Century Bank, said staying away from subprime loans may have looked “dumb” once, but now it’s proven to be a “smart” move.

“We’ve been a conservative lender,” Absher said. “We haven’t had subprime loans, so we haven’t seen the spike in foreclosures, thank goodness.”

One vision area bankers keep in mind is the Sept. 1, 1999 collapse of the First National Bank of Keystone in McDowell County, one of the biggest financial failures since the Great Depression. It is an example of what can happen when financial institutions use questionable practices, Reed said.

“When local banks start thinking there’s a get rich quick scheme out there, somebody gets burned,” he said.

All in all, this is one of those parts of the country that has been fortunate enough to not be too dramatically affected by foreclosures. Unless interest rates come down, the threat of foreclosures increasing will continue.

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