Foreclosure filing stats show Valley isn't immune to poor economy

The number of homeowners facing foreclosure rose dramatically in recent months in Hidalgo County, according to statistics released Friday.

More than 8 percent of homeowners with loans in the county entered foreclosure proceedings in the past 18 months, according to statistics released Friday by the U.S. Department of Housing and Urban Development.

The statistics, compiled by government officials to determine where to spend $101 million to rescue neighborhoods from the subprime lending crisis, highlights the growing number of locals unable to afford their mortgages.

Yet those same statistics do not show how many of those homeowners facing foreclosure actually lost their homes, local officials cautioned. It's impossible to know just how many homes have actually been foreclosed on because some homeowners may have cut a deal with the bank.

Regardless, Hidalgo County Judge J.D. Salinas said the number shows just how the nation's economic woes have hit the Rio Grande Valley.

"Numbers don't lie regardless of what they are," Salinas said. "When you lose your house, it's a domino effect - you lose other things, too."

Anecdotal evidence suggests a growing number of Valley homeowners are reeling from getting mortgages and loans they couldn't afford.

On Tuesday, 748 foreclosed homes will be put up for auction at the Hidalgo County Courthouse, said Steve Radle, a local home appraiser. Radle, who compiles foreclosure listings and sells the data through a monthly subscription service, said it's one of the highest numbers he has ever seen.

"A big percentage of them are the subprime mortgage loans," Radle said. "And there's some that are pretty fair-sized homes and vacant land. It's across the board."

During the real estate boom years, banks extended loans to people who otherwise couldn't afford a mortgage or to people who wanted a bigger loan than they would normally be able to get. A significant number of those subprime loans here in the Valley ended up in default when people found themselves unable to keep up with the payments.

"That's what I believe killed the people," said Deborah Martin, owner of Edinburg-based Realty World Valley Properties. "I don't think they realized the impact of what was going to happen."

During that same credit craze, homeowners were also able to use their houses as collateral for loans that were worth more than their homes' value, Martin said. Those owners also have begun falling behind on payments and defaulting on their loans.

Area real estate officials broadly agree the market is in a slump exacerbated by banks' reluctance to extend credit, but other officials argue the local housing market is still better than in many areas of the country.

Steve Ahlenius, president and chief executive officer of the McAllen Chamber of Commerce, asserted that the government's data is inaccurate.

He cited a September report by California-based RealtyTrac - a for-profit clearinghouse for nationwide foreclosure data - that showed only 286 foreclosures in Hidalgo County for the month of August. That was far lower than the 617 figure the county reported for the same month.

"I think we're in good shape," Ahlenius said. "It's nothing that has me worried."

The government culled data from the Washington, D.C.-based Mortgage Bankers Association, a national association representing the real estate finance industry, as well as from the county level.

A spokesman for RealtyTrac said the company obtained its data through a third-party source that presumably obtained it from the Hidalgo County government. RealtyTrac refused to disclose the source and could not explain the discrepancy.

Daren Blomquist, a spokesman for RealtyTrac, said the company's September study will be more accurate because RealtyTrac now employs someone locally to analyze the data.

"We don't consider that county fully covered until we have the (data) abstracter pulling in the data," Blomquist said.

Hidalgo County's share of the neighborhood rescue money from HUD is $2.8 million.

The county topped the list of Texas communities slated to receive a piece of the federal funding. Its 8.2 percent foreclosure start rate was even higher than the averages for California and Florida, which have taken some of the hardest hits from the subprime crisis.

The county, however, fell well below some cities in the worst hit areas, including Stockton, Calif., which posted a 12.3 percent rate.