Rates of new Iowa home foreclosures stabilizing

DES MOINES – The rate of Iowa homeowners facing foreclosure has leveled off, but Iowa Attorney General Tom Miller said Thursday the plateau is still above historical norms.

“Foreclosure rates are starting to stabilize in Iowa as compared to other states,” Miller said, noting that Iowa moved from 26

^th

nationally for foreclosure “starts” in early 2007 to sixth best in the nation for the second quarter of 2009. “This is a good trend.”

There were 344,360 home mortgages in Iowa at mid-year, with 0.63 percent of those starting the foreclosure process in the April-to-June period, state officials said. By contrast, the national rate was roughly double at 1.36 percent.

Miller credited Iowa's improved position in part to the hotline (877-622-4866) that started in February 2008 to assist homeowners and their lenders to reach an agreeable mortgage modification on loan terms that enabled people to continue to make partial payments that kept them in their homes.

Since its inception, the hotline – which is run by a coalition of organizations -- has taken an estimated 8,500 intake calls and received more than 6,600 applications from all 99 counties. About 55 percent of the cases resolved by the hotline this year resulted in various kinds of mediated agreements while many of the others ended in foreclosure.

“Where we can't save the home, we can still help prepare the family for a ‘soft landing' instead of a crash,” Miller said.

“Iowa's program was one of the first in the nation and it remains one of the very best,” he added. “The program is working. It is saving Iowans from foreclosure.”

Initially, the attorney general said the mortgage crisis was rooted in underwriting for subprime loan and other lending practices that established unrealistic expectations for the borrower in the out months. Since then, job losses and other economic factors related to the recession have factored heavily into troubled loans.

The Iowa mortgage help hotline has been receiving nearly 100 applications per week since early this year, Miller said. Before that, the hotline had received about 80 applications a week, but a law change now requires lenders to notify borrowers that the free hotline is available when they are served with a foreclosure notice.

More information about the help hotline is available at www.IowaMortgageHelp.com, he added.