Local foreclosures

doubled in ’08
BY MELANIE DAVIS
 
Foreclosures of property more than doubled in 2008 compared to 2007 in Watauga County.

According to the Watauga County Sheriff’s Office, 76 notice of foreclosure hearings were served in 2007. Last year, that number climbed to 381, as of mid-December.

The notice of foreclosure is the first step in the process. Not all notices result in foreclosure. Clerk of court Glenn Hodges explained there are some differences in the numbers of notices served by WCSO and the relation to properties within the county. Officers may serve a notice of foreclosure hearing on a resident of Watauga for a property outside the county. Hodges estimated 40 notices of foreclosure hearings for Watauga property in 2007 and 225 in 2008.

The hearing falls under the sole jurisdiction of the clerk’s office as a special proceeding. A judge is not involved unless the foreclosure is appealed.

At the hearing, the clerk reviews five factors. The property must be under a mortgage or lien; the lien holder must have a right to foreclose; the mortgage holder must be behind in payments (note: this is typically set in the terms of the mortgage to be one to two payments); and the notice of hearing must have been served to all parties involved.

The final aspect the clerk takes into consideration is a new addition, which Hodges says mainly applies to sub-prime mortgages. The mortgage holder has the option to apply for an additional 90 days to work with the lender. This application process goes through the Commissioners of Banks.

If all of the above criteria are met and the application for the additional 90 days has not been filed or has expired, the foreclosure is ordered.

The mortgage holder then has two avenues to stop the sale. The foreclosure can be appealed to be heard in front of a judge. The judge will consider the same criteria listed above. An appeal alone does not stop the sale. A bond may be purchased to cover the full amount owed on the property. If bonded, the sale will be stopped, pending the appeal process.

If the mortgage holder files bankruptcy, the sale is put on hold during bankruptcy proceedings.

In the event foreclosure is ordered to proceed, a sale date is set and posted on a bulletin board in the courthouse. The sale is a public event held by the trustee of the loan, i.e. the bank or agent in the front entrance of the courthouse.

When a person bids on foreclosed property, a 10 percent payment of the full bid is paid directly to the trustee at the time of the bid. An upset-bid period of 10 days follows the public sale. At this time, a person can offer a higher bid, a minimum of 5 percent higher.

To put in an upset-bid, the person must pay a 5-percent deposit, or $750 (whichever is higher), to the clerk, in cash or certified check only.

The upset-bid periods will continue at 10-day intervals until the last bid is made.

Hodges clarified that if bankruptcy is filed by the mortgage holder after the public sale and upset-bid periods have begun, the highest bidder does not receive a refund of their bid deposit until the bankruptcy proceedings are complete and the foreclosure proceedings have been determined.

If the bank or mortgage company wishes to retain the foreclosed property, it must go through the bidding process, along with the general public.

According to register of deeds Joanne Townsend, trustee deeds, which are the types of deed recorded when property is sold at a public sale, rose to 70 in 2008. There were 27 trustee deeds recorded in 2007.

Hodges notes several trends in the past year’s rise in foreclosures. “This year, we’ve seen several timeshare properties, second homes and some businesses affected,” he said.

He added that businesses accounted for only 5 to 10 percent of the total.

“It is hard to predict what next year will hold,” he said. “We don’t know what is in store.”