Expect many more foreclosures

July was not a good month for local homeowners. While others went to cookouts and watched fireworks, 58 houses went into foreclosure in Culpeper County.

That’s more than three times as many homes that went into foreclosure last July, and the worst month this year. August was nearly as bad, with 51 homes entering foreclosure in the town and county.

Through Sept. 3, county records show, 297 houses — and another 30 vacant lots — went into foreclosure in Culpeper.

Last year’s total was 180, meaning an 82 percent jump, so far, compared to 2007.

There were only 33 foreclosures in Culpeper in 2006.

Of this year’s foreclosures, the split between town and county properties remains mostly even, with 167 occurring in various regions of the county and 160 within the town of Culpeper.

Experts say the housing fallout is far from over.

“We are anticipating another flood of foreclosures in the fall,” said Nancy Heflin, president of the Greater Piedmont Area Association of Realtors.

And beyond that, nearly $100 billion worth of loans nationwide are considered at risk for foreclosure in the next two years, according to a recent report by Fitch Ratings.

That’s because those adjustable rate mortgages, or ARMS, that were all the rage a few years ago are not done adjusting up. Add to that declining home values, and many homeowners are in for hard times.

“If you did 100 percent financing, you’re definitely upside down in your mortgage right now,” said Dustyn Deal, senior loan officer at Mason Dixon Funding Inc. “It means you put no down payment down and you bought high — that’s what the value was — so now that the values have come down there’s no equity.”

Now that these loans are “recasting,” Deal said, “maybe you had a teaser rate of 5.5 percent interest only” — the mortgage payments can now rise by $300 to $500 a month.

The average increase in mortgage payments will be 65 percent,” Alla Sirotic, senior director for Fitch, told the Tampa Tribune. “Payments could jump by as much as 100 percent for some people. If you can’t get out of the mortgage or pay that payment, you’ll be in default.”

Amissville real estate agent Julie Emery said the housing market is not “its own little corner of the economy,” a phrase she felt the government used as a justification to not help struggling homeowners.

“And so the hole got bigger, more people lost their homes,” wrote Emery Sept. 23 at realtown.com/jemery/blog, a local online real estate discussion site.

“And what do you know, it turns out that when enough people lose their homes, banks lose money. If enough homes get lost and enough banks get hurt, then there is reason for the government to step in and help.”

To what extent struggling homeowners could receive government help remains unknown.

For sale signs everywhere
Meanwhile, many empty homes are saturating Culpeper’s larger subdivisions, most of which went up in just the past five years or so.

Lakeview, along Sperryville Pike, leads the way in that regard, with 40 foreclosures this year. Meadows of Culpeper, on the northeast edge of town, is close behind with 38. Redwood Lakes, adjacent to Lakeview, has seen 24; Highpoint on Orange Road has 15.

However, a bit of good news from Emery is that the housing inventory has reduced some sine last year. In August in Culpeper, there were 676 houses on the market, she said, compared to 814 homes for sale at this time a year ago.

It’s a good time to buy because prices are much lower, but it’s a different story for sellers.

“I believe you’ll continue to see prices flat or falling for at least the next six months,” Emery said on her blog; banks are getting their listings sold “by dramatically discounting price.”

“If you’re a seller,” she continued, “that’s your dilemma. Do you drop your price to compete with the banks? Can you afford to wait until all the foreclosures work their way through the system, potentially at least another year? Do you rent it out and hope for a better market at the end of your lease?”

Allison Brophy Champion can be reached at 825-0771 ext. 101 or .