Foreclosures down
State is out of step with growing nationwide numbers
State is out of step with growing nationwide numbers

By Richard Mize

Published: February 14, 2008

Oklahoma City's foreclosure rate dropped 15.4 percent in 2007 even with increased filings statewide late in the year, RealtyTrac reported this week.

Tulsa's rate — the percentage of households in foreclosure — fell 3.6 percent last year compared with 2006, according to Irvine, Calif.-based RealtyTrac, the national online marketplace for foreclosed properties.

RealtyTrac said the year-end foreclosure rates in both cities were less than 1 percent, 0.801 percent in Oklahoma City and 0.912 percent in Tulsa.

The metropolitan-area decreases were in line with the statewide drop the company reported last month: The number of foreclosure filings in Oklahoma last year — 13,594 — was down 12.78 percent compared with 2006.

Compared with much of the rest of the country, Oklahoma is as out of step with its negative changes in foreclosure rates as it is with its positive changes in home values.

Homes are depreciating slightly on average nationally — and drastically in some major markets — even as values in Oklahoma have continued to rise relatively slowly but steadily.

Of the nation's 100 largest metro areas, 86 saw increases in foreclosure rates last year, RealtyTrac said. The national foreclosure rate was 1.03 percent at the end of 2007, an increase of 80 percent from 2006.

"Most of the metro areas with the highest foreclosure rates were either cities like Stockton (California) or Las Vegas, which experienced meteoric growth and unsustainable price appreciation over the past few years, or cities like Detroit, which are undergoing a more widespread economic downturn along with higher unemployment rates,” RealtyTrac Chief Executive James J. Saccacio said in a news release.

Cities in California and Florida, where housing and credit bubbles have busted, and in Michigan and Ohio, where job losses have staggered economies, dominated the top 20 metro-area foreclosure rates, the company reported.

The relative lack of both — lost home equity and lost jobs — is the main reason why Oklahoma has not experienced anything close to the foreclosure increases in the hardest-hit cities, said Lyne Tracy, a mortgage banker with BOk Mortgage, a department of Bank of Oklahoma.

Oklahoma's home price appreciation was nothing close to the fast and unsustainable run-ups in prices on the coasts, so while some homeowners have struggled, not much equity was lost, she said.

On the job front, she said, "We're in a very strong position right now,” with not only a resurrected energy industry but a more diversified employment base than during the 1980s-era oil-and-gas boom.

Tracy said two other big causes of home foreclosures didn't make much of a dent in Oklahoma even though they dominated purchasing and mortgage lending not that long ago on the coasts: negative-amortization mortgages and other exotic loans, and a stampede of investors driving up prices on speculation.

"Bad” ARMS — adjustable-rate mortgages, the kind with short-term low rates and rapid resets — were not prevalent here, she said, noting that not all such loans can lead to trouble.

Loans with a 10-year fixed rate and no negative amortization never went out of style, she said.

With so-called "neg-am” loans, the loan payment for some period is less than the interest charged over the same period.

She said subprime loans were made here, but not enough for problems with them to set back housing as a whole, as seems to have happened in some places.

Questionable and risky borrowing and lending didn't dominate in Oklahoma, Tracy said, because of lessons learned the hard way in the 1980s, when dicey lending and weak underwriting led to twin crashes, in energy and real estate.

Statewide, the number of foreclosure filings in the fourth quarter was almost flat compared with the wide swings elsewhere — up 1.8 percent.

However, the number of filings during the quarter, 3,419, was an increase of 13.5 percent compared with the fourth quarter of 2006, according to RealtyTrac.

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