Bexar has most foreclosed properties since 1990
Thanks to easy lending standards that gave no-money-down loans to people with questionable credit histories, higher foreclosures likely will be an unwelcome houseguest in Texas for a few years. The foreclosures mostly are hitting those who made small or nonexistent down payments on their homes, and who likely are first-time home buyers. "This is the most we've had since the savings and loan crisis," said Gregg Stanley, owner of Real Estate Foreclosures, a San Antonio-based foreclosure tracking service. Stanley said loose mortgage lending practices and adjustable-rate mortgages resetting to higher — more unaffordable — rates are to blame.

Bexar has most foreclosed properties since 1990  10/19/2007
Jennifer Hiller
Express-News  
Bexar County foreclosure postings have hit the highest monthly total in more than 17 years, reaching a level not seen since the oil bust and real estate slump of the late 1980s and early 1990s.

November's foreclosure auction will see 936 homes sold off to the highest bidder.

And this is no one-month aberration.

Thanks to easy lending standards that gave no-money-down loans to people with questionable credit histories, higher foreclosures likely will be an unwelcome houseguest in Texas for a few years.

The foreclosures mostly are hitting those who made small or nonexistent down payments on their homes, and who likely are first-time home buyers. 
 

But in additional to entry-level homes, the San Antonio-based Real Estate Foreclosures noticed a large number of high-end properties going into foreclosure in November, an indication that borrowers at all income levels may have overreached their incomes while mortgage lending standards were easy.

With so many homes headed for auction on the courthouse steps next month, Bexar County is on track to have more than 9,100 foreclosures this year — more than at any time since 1990.

That's when the Soviet Union started to collapse, Steve Ray Vaughn died, Milli Vanilli won and lost a Grammy for Best New Artist and James "Buster" Douglas knocked out Mike Tyson to win the World Heavyweight Boxing title.

"The next wave has hit," said Gaines, research economist with the Real Estate Center at Texas A&M University.

Foreclosures were routinely above the 9,000 mark in the late 1980s after oil busted, real estate nose-dived and scandals rocked the savings and loan industry.

Bexar County foreclosure postings slowed in the 1990s, but started rising dramatically by 2001.

"This is the most we've had since the savings and loan crisis," said Gregg Stanley, owner of Real Estate Foreclosures, a San Antonio-based foreclosure tracking service.

Stanley said loose mortgage lending practices and adjustable-rate mortgages resetting to higher — more unaffordable — rates are to blame.

More than 26 percent of the Bexar County properties going into foreclosure in November have adjustable-rate mortgages, according to a foreclosure data analysis by his company.

And the loans going into foreclosure are fairly recent — just 4.5 years old on average.

Stanley also thinks there's a new problem dogging real estate: a lack of confidence.

So much dismal news about the mortgage industry and home prices dropping in other states has spooked homeowners who've fallen on hard times.

This is despite the fact Texas home prices still are rising and the state is seen as one of the brightest spots in the nation for real estate.

"These November foreclosures started about six months ago," Stanley said. "If you recall, that's when a lot of the bad news was coming out about the national real estate market. Some people here just walked away from their mortgage."

Gaines agrees, and believes the higher foreclosure numbers are here to stay — at least for a few years until the real estate industry works its way through the series of risky mortgage loans made in 2004 and 2005.

Texas foreclosures actually dropped in the first part of the year, but Gaines thinks that just was the luck of timing.

He suspects banks and lenders may have held off from foreclosing for a short time, either in hopes a government bailout might come or in an effort to try to work out a deal with a homeowner.

When neither of those things happened, the foreclosure filings increased.

Meanwhile, San Antonio already has a rising inventory of pre-owned homes for sale and new-home builders are working to sell off a slight oversupply of homes. More foreclosure homes won't help either of those markets.

"I don't think the builders are going to see relief for two to three years," Gaines said. "The inventory has to clear the market."

One thing that should be different this time around with foreclosures, Gaines said, is that plenty of investors are willing to purchase distressed properties.

Hundreds of properties get posted each month for foreclosure, although only about 40 percent of those homeowners actually lose their homes.

The rest catch up on their mortgage payments or go into bankruptcy, which slows the foreclosure process.

Although there always will be some foreclosures due to illness, death or job loss, most foreclosures happen within the first five years of homeownership, Stanley said. That's before borrowers build up much equity in their homes.

And with the little-to-no-money-down loans so popular in recent years — and thus, so little home equity from the beginning of the loan — there's been little financial incentive to try to stay in a home once someone falls behind on mortgage payments, Gaines said.

The next foreclosure auction is Nov. 6 on the steps of the Bexar County Courthouse.

The Bexar County clerk's office next week will post foreclosures for the Nov. 6 sale on its site at www.countyclerk.bexar.landata.com/.

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