The number of local homes in foreclosure rose last year, but the jump wasn’t unexpected.
More than 905 homes were set for auction by the Johnson County Sheriff’s Office because of delinquent mortgages in 2012. That was a 33 percent increase from 2011.
But the number of foreclosures is down from a high of 1,241 in 2010.
The number of local families who lost their homes to foreclosure dropped significantly last year, but at the time it wasn’t clear whether the numbers fell because the housing market was improving or because of a backlog in filing paperwork.
JOHNSON COUNTY HOME FORECLOSURES
*Numbers indicate sales set for Johnson County. These numbers do not indicate these properties were foreclosed.
Now, experts say the answer was both.
When a bank forecloses on a home in Indiana, the case is required to go through local courts, a requirement other states don’t have. And when the housing crisis first reached its peak in 2008 and 2009, that created a foreclosure backlog, Indiana Business Research Center demographer Matt Kinghorn said.
The process of banks filing the foreclosure lawsuits also was slowed when they were required to follow strict procedures on processing and signing that paperwork, creating a backlog of banks starting the foreclosure process.
More homeowners faced foreclosure last year because more lawsuits filed by banks have been processed in court, Kinghorn said.
Across central Indiana, the number of homes going into foreclosure varied last year.
The number set for auction as part of the foreclosure process in Marion County fell by approximately half to approximately 7,000, while the number of sales set in Hendricks County rose from 555 foreclosed homes to 939 foreclosed homes, according to numbers from the counties’ sheriff’s departments.
Homes and other properties often go to an auction by the sheriff’s office as part of the foreclosure process in which bidders can pay what is owed or the bank keeps the property if no one makes a bid. The number of sales set doesn’t necessarily indicate the total number of properties that were foreclosed, because a property could have been scheduled for sale multiple times.
With the backlog in courts and banks ending, the number of homeowners losing their homes to foreclosures should continue to drop.
The number of cases being sent to court is starting to fall. And most residents who received high-risk loans that they couldn’t repay already have defaulted. Now, before banks issue loans to homeowners, they require more proof that the prospective owners can make all of the payments, Kinghorn said.
“In general the foreclosure situation is going to improve over the next few years,” Kinghorn said.
Homeowners who shouldn’t have been approved for loans received money from banks in the early to mid-2000s and then started defaulting on what they borrowed between 2007 and 2010, Kinghorn said.
Now banks that are lending money have higher standards for whom they’ll lend to.
Specifically, they’re requiring more documentation from prospective homeowners to verify their credit and ensure they can repay what they owe, as well as larger down payments, Kinghorn said.
“A lot of the loans that have been given since the bursting of the housing bubble have been of higher quality,” he said.
Kinghorn said the foreclosure numbers should continue to improve; however, that will depend partly on the unemployment rate.
“If they can get a job, then obviously that’s going to lessen their risk of falling behind in payments. Or fewer people losing jobs,” Kinghorn said.