Matthew Penix

St. Tammany News

Foreclosures in St. Tammany Parish surged nearly 700 percent in the third quarter this year compared to the year-ago period as homeowners struggle to make exorbitant mortgage payments caused by a post Hurricane Katrina housing frenzy.

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Foreclosures are not as much a problem in Washington Parish.

Jumping from six during 2006's third quarter to 41 this year, St. Tammany boasts the highest year to year foreclosure rate in the state, far worse than the national increase of 100 percent, according to date released recently by Irvine-based RealtyTrac Inc, a mortgage company that tracks foreclosure data.

"A lot of people after Hurricane Katrina had to buy when prices were extraordinary high and extremely inflated," said Susan Ameen, a realtor with Keller Williams Realty Services in Mandeville. "They needed housing and could barely afford the house note. Now the littlest thing could set them back. That's pretty frightening."

Nationwide it's just as scary, she said. A total of 446,726 homes were targeted by some sort of foreclosure activity from July to September, up 100.1 percent from 223,233 properties in the year ago period, according to the data. That's roughly one foreclosure filing for every 196 households nationwide.

In comparison, St. Tammany foreclosures jumped more than 100 percent from 20 last quarter to 41 this quarter, while Washington Parish's foreclosures jumped 100 percent from zero in the year-ago period to one this quarter and zero last quarter. During that period, August and September produced the highest monthly foreclosures totals since 1995 when RealtyTrac started tracking foreclosures, CEO James J. Saccacio said in a statement.

Now experts disagree when the surge will slow down.

"Given the number of loans due to reset through the middle of 2008, and the continuing weakness in home sales, we would expect foreclosure activity to remain high and even increase over the next year in many markets," Saccacio said. But Skip Scoggin, president and broker of Scoggin Properties GMAC Real Estate based in Covington, said the light is flashing at the end of the foreclosure tunnel.

"We're approaching the bottom for pricing," Scoggin said. 'It's a natural business cycle, Sure, Katrina had a lot of impact, but the market is playing itself out. It's returning."

First however, it may get worse. Mortgage lenders expect a deluge of defaults between 2008 and 2011 as adjustable-rate mortgages are reset with higher interest rates, leaving homeowners scrapping to produce payments. Adjustable-rate loans - such as sub-prime loans for those with bad credit and ALT-A loans for those with good credit but can't verify income - were initially attractive for buyers because they offered "teaser" rates that kept monthly payments low. But even with the slightest rate increase, those mortgages could soar beyond a homeowner's budget. And now with the housing market in decline or flat in many areas, homeowners can't sell their homes and thus they default on payments. The cycle, it seems, could continue.

"Most of the consumers here are keeping their heads above water, but many might be treading water soon," said Lance Scott, president of Integra Lending in Madisonville.

In St. Tammany, where residents are considered among the wealthiest in the state, most didn't or couldn't qualify for these type of adjustable-rate mortgages thus dodging the financial Mack truck, Scoggin said. Still there are some residents, especially with the influx of Katrina evacuees who settled in St. Tammany, who may fall into "the bucket," Scott said.

"We're in a pretty position in south Louisiana as a whole because consumers tend to be pretty conservative,' he said. "It's the second homes where people are struggling to meet their payments, which unfortunately downgrades their ability to buy in the future."

Orleans Parish residents actually lowered foreclosures rates 22.7 percent from 353 last quarter from to 273 this quarter, but still remained 143 percent above the year-ago period of 112. In Washington Parish, homeowners seem to be following the Orleans trend. The number of foreclosures dipped from four last quarter to one this quarter but still ranks higher than the year-ago period when zero foreclosures were reported.In all, 635,159 foreclosures were reported in the third quarter, up 99.5 percent from the year ago period and up 30 percent from the second quarter this year.