Home mortgage foreclosures are climbing sharply in Pennington County and are on pace to eclipse last year's total by the end of September.

Pennington County reported 100 foreclosures in 2007, and have already handled 75 this year - many of which are on homes priced at around $100,000. In addition, another 40 had been scheduled but were canceled after lenders and borrowers reached an agreement of some sort, according to county civil deputy Tana Robertson.

Ten years ago, Pennington County was averaging fewer than 28 foreclosures annually.

Neighborhood Housing of the Black Hills has felt the increase. The group dealt with a total of only five or six families facing foreclosure during the agency's first 10 years, according to community outreach coordinator Michelle Eddy. But since the beginning of 2007, Neighborhood Housing has seen about 25 families who need help.

"Some are in foreclosure," Eddy said. "The majority are on the verge."

Just below the statistical surface, many people in western South Dakota are struggling to make their house payments as they grapple with rising gas and food prices, said Terry Mills, education and community outreach manager for Consumer Credit Counseling of the Black Hills.

Mills said more people are coming to his agency for help.

Many of these people aren't in foreclosure or even behind in their payments.

"We don't have the numbers like Las Vegas and other places," Mills said, "but it's just really below the surface. With $4 gas and rising food prices, it puts a lot of pressure on all of us."

Mills said rising taxes and insurance rates are also hurting homeowners.

"It's a real issue here."Rising foreclosures

Pennington County has seen a sharp increase in home foreclosures over the past two years.

2003 61

2004 80

2005 71

2006 77

2007 100

2008 75*

*through June 27

STATE BELOW AVERAGE

Despite the increase locally, the state remains well below the national average.

At the end of the first quarter this year, 1.21 percent of the home loans were in foreclosure, slightly up from the previous quarter, according to a survey by the Mortgage Bankers Association. That compared with a national foreclosure rate of 2.47 percent.

For the same period, 2.89 percent of home loans in South Dakota were past due, a slight decrease. That compares to a national delinquency rate of 6.35 percent.

Foreclosure rates for first-time homebuyers in South Dakota Housing Development Authority programs are even more microscopic, running well below 1 percent, according to Brent Adney, director of single-family programs for SDHDA.

"We are at .54 percent of loans in foreclosure for the first-time homebuyer program," Adney said. That's down slightly from .57 percent and .55 percent from the previous two months, he said.

"We're not seeing values decreasing and the market falling apart," Adney said. "What we are seeing are higher gas prices, higher food costs and all of that."

DODGING THE MESS

Of course, some places in the country are in much worse shape. In Las Vegas, one in about 199 homes is in foreclosure, according to Scott Benson, a home mortgage consultant with Wells Fargo Mortgage in Rapid City. In South Dakota, it's about one in 11,000 homes.

"In Phoenix, I believe there are 59,000 houses on the market, and 25 percent of them are vacant," Benson said.

Some of those markets experienced soaring housing prices and some lenders took aggressive measures, offering so-called subprime mortgages to people with little or no cash.

Benson and others say few such loans were made in South Dakota, which also has benefited from relatively slow but steady growth in housing values. "In our area, people in the Midwest are more conservative," Benson said.

Benson said it's hard to pinpoint causes of the current spike in Rapid City foreclosures.

"A lot of it's probably just unfortunate situations," he said. "I don't think foreclosures in our area are so much due to people getting into mortgages and not knowing what they were doing."

He said mortgage activity has increased over the past few years, and with greater numbers, it's normal to see more defaults.

VALUES HOLDING UP

Sheila Tom, president of the Black Hills Board of Realtors, said the average sale price for homes in the Rapid City area is at $174,000, up about $9,000 from the $165,000 average a year ago.

And even though the number of homes sold here fell 18 percent to 574 last month from 701 in May 2007, all other indicators are good, Toms said.

She said May sales sometimes are skewed by families getting their children out of school and going on vacations.

She also said there are fewer new houses for sale this year, 197 compared to 234 a year ago. But Tom said the average sale price for newly built houses has risen from $206,000 last year to $229,000 this year.

She also said the number of homes on the market has stayed fairly stable, and the number of days on the market has actually dropped, from 88 days last year to 86 this year.

An April report by Republic Mortgage Insurance Co.'s chief economist confirmed the stability in South Dakota. Eighteen states were classified as declining markets or facing persistent price declines, and 31 states were in transition toward either decline or stability.

Only two states were classified as either stable or experiencing rising housing prices: Oklahoma and South Dakota.

Tom was puzzled by the accelerating rate of foreclosures this year. She had homeowners ask her last year to give them a market analysis. They said they were going to make some improvements before selling.

"They never called back," Tom said. "I saw in January that they went into foreclosure. They never put it on the market for sale."

She has noticed several such cases.

"I don't know if people are just giving up from the negative publicity, which has not been prevalent here."

Contact Steve Miller at 394-8417 or steve.miller@rapidcityjournal.com

Source: Pennington County sheriff's office

Help available for homeowners

People who are having trouble making their house payment can get help.

But timing is the key, said Terry Mills, education and community outreach manager for Consumer Credit Counseling of the Black Hills.

"The sooner you contact your lender, the more options they'll have for you to refinance or renegotiate," he said.

Scott Benson, a home mortgage consultant with Wells Fargo Mortgage in Rapid City, agreed.

"If it's already gone into foreclosure, a lot of times it's too late," he said. But if the homebuyer asks for help soon enough, lenders can help via measures such as refinancing, eliminating debt or lowering monthly payments, he said.

"Lenders would rather do that than have to foreclose on a property," Benson said.

People also need to make a plan for their spending and look for ways to cut back, Mills said.

Payment history is also a factor.

"If you've been a good payer, they are more apt to work with you when life happens," Mills said. Such things as car breakdowns and unexpected medical bills can happen to anyone, he said. On the other hand, "If your payment history is not very good, lenders are not very sympathetic."

Consumer Credit Counseling of the Black Hills is providing free counseling to prevent foreclosures to any western South Dakota residents. The agency is providing the counseling through a federal grant of about $50,000 that resulted from the National Foreclosure Mitigation Counseling Program approved by Congress last winter, Mills said.

Neighborhood Housing of the Black Hills, one of two Neighborworks America agencies charged with implementing the Hope Now foreclosure prevention program in South Dakota, also is working with homeowners who are in or facing foreclosure action.

Hope Now is the home credit industry's self-imposed plan to freeze interest rates on adjustable rate mortgages for five years and to give struggling homeowners the chance to refinance their loans. People must access the program before they get six or seven months behind in their payments, however.

Neighborhood Housing of the Black Hills doesn't have funding to help people, but through counseling, the agency has been able to help some people stay in their homes, according to community outreach coordinator Michelle Eddy.

However, Eddy said, "In some cases, they come to us too late."

With credit regulations tightening, Wells Fargo is channeling more business through the Federal Housing Administration and South Dakota Housing Development Authority, which have stricter qualification standards, Benson said.

"The actual qualification process educates the buyer."

Benson said many people don't understand the impact that credit problems can have on buying a house, or any other major purchase.

"If they have problems, we show them what caused the issues, and what they can do to improve it," Benson said. "If they're not able to buy at that time, we try to set them up on a six-month to 12-month plan to get in position to be able to buy a home."

Benson said the mortgage crisis has been blamed mostly on unwise mortgage practices, although there are other factors such as collapsing housing values.

"Are there some mortgage people out there that have done some things they shouldn't have? Yes. But at some point, the consumer has to take responsibility also," Benson said.

Glen Bruhschwein is an attorney for the Mackoff Kellogg law firm in Dickinson, N.D., which handles many of the foreclosures in western South Dakota.

Bruhschwein said the lending industry tries to work things out with borrowers.

"Sometimes the mortgage company and the borrower are able to work things out on a short-term basis to try to get back on track. It's generally what's best for everyone," he said, adding, "Sometimes it just can't work." Where to get help

- Consumer Credit Counseling of the Black Hills. Call 348-4550.

- Neighborhood Housing of the Black Hills, one of two Neighborworks America agencies charged with implementing the Hope Now foreclosure prevention program in South Dakota. Call 605-578-1401 or 1-888-995-HOPE.

Contact Steve Miller at 394-8417 or steve.miller@rapidcityjournal.com