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Foreclosures spike, but experts say lenders are willing to negotiate…

Properties are mostly houses, but Chinatown Center among postings.

By Shonda Novak
AMERICAN-STATESMAN STAFF
Saturday, February 14, 2009

Foreclosure postings in Central Texas spiked in March, but experts say they don’t think those levels will continue throughout 2009.

Foreclosure Listing Service Inc. said the 551 postings filed in Travis County for the March 3 auction were up 56 percent from a year ago. They rose 28 percent in Bastrop County, 39 percent in Hays and 50 percent in Williamson.

The March and first-quarter postings for Travis County were the highest since the firm began tracking the numbers in 1993, said George Roddy Sr., president of the Addison-based firm.

The vast majority of the postings were for homes, mostly valued below $200,000.

But they also included Chinatown Center on North Lamar Boulevard, according to www.rexreport.com, a Web site run by a San Antonio company that compiles foreclosure lists for investors.

The complex, valued at $22 million on the tax rolls, includes a grocery store and other businesses that serve Austin’s growing Asian American community.

Ben Broocks, attorney for Chinatown Center, said the center is in negotiations with its lenders and that the posting was a “typical strategy to gain leverage.”

Broocks said that he “fully expects” to reach an agreement with the lenders, adding that the center was “open, vibrant and not in danger of closing.”

Managers or employees at several of the stores in the center said they were unaware of the posting.

Roddy and other foreclosure experts say they think lenders might be playing catch-up after the end of a foreclosure moratorium from Nov. 21 through Jan. 31 on mortgages backed by Freddie Mac and Fannie Mae.

“Sooner or later, they open up the floodgates,” said Peter Sajovich, an Austin real estate broker who buys investment properties for clients.

Roddy said he thinks foreclosures have peaked in Central Texas, albeit at high levels.

“I’m not looking for this to be a trend,” Roddy said.

“I think we have basically peaked,” he said, though he added that future job losses remain a big unknown that could alter his outlook.

Hugh Parrish, a veteran real estate broker, said it remains to be seen whether March’s numbers for Travis and Williamson counties are a trend or catch-up from the moratorium.

“I’m not sure that it is a blip, but I’m also not sure it isn’t,” Parrish said. “We’ll just have to let the first few months of the year play out and see what happens in April and May.”

Parrish said the Travis postings are nowhere near what they were in the late 1980s, when he said, “we were seeing 1,200 to 1,400 postings every month, and that’s with about half the population we have now.”

Roddy said reasons for foreclosures have shifted recently, from a surge in defaults on subprime loans made from 2003 to 2007 to people who are struggling to pay rising food, fuel, utility and other bills as wages have remained flat.

Whereas lenders used to wait about six months before foreclosing, they’re now waiting about eight or nine months, he said.

Lenders don’t want to foreclose because “it will add more and more inventory on their books, which affects how much money they can loan,” Roddy said. Lenders can also incur costs associated with owning a vacant house.

Roddy said that although there will be more layoffs, he thinks people will be able to renegotiate their loans and stay off the foreclosure list.

“These lenders don’t want to foreclose,” Roddy said. “In some cases, they will go out of their way not to foreclose. This was not true a year ago.”

snovak(at)statesman.com; 445-3856

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