Foreclosures of Dallas-Fort Worth homes worth more than $1M double

09:36 PM CDT on Thursday, July 3, 2008

By STEVE BROWN / The Dallas Morning News
stevebrown@dallasnews.com

The mortgage meltdown that started out with mostly moderate- and low-income borrowers has spread to more affluent homeowners.

Foreclosures of million-dollar-plus houses are the fastest-growing segment of the Dallas-Fort Worth distressed home market, according to a new study.

More than 70 residences that went for $1 million and up have been posted for foreclosure in the first half of 2008 – more than twice the number in the same period last year, Addison-based Foreclosure Listing Service said Thursday.

"In addition, homes valued from $500,000 up to $999,999 had about a 53 percent jump in foreclosure filings, and homes valued at $300,000 to $499,999 had almost a 39 percent gain" this year, according to Foreclosure Listing Service president George Roddy.

Through June of this year, one out of every 59 D-FW homes has been posted for foreclosure.

"It's pretty scary," Mr. Roddy said. "This is the first time we have looked at things this way.

"Consider that if you know 59 homeowners, one of them had their home posted for foreclosure during the first six months of this year."

The North Texas housing market during the last few years has been hit hard by home foreclosures due in many cases to loose lending standards that allowed people who couldn't afford homeownership to buy. A large number of borrowers took out subprime home loans that allow monthly payments to rise to unaffordable rates.

Increasing economic problems this year have just added to the number of failed home loans.

During the first half of 2008, about 25,500 home foreclosure postings have been recorded in the four-county area.

That's up from about 21,000 in the same period last year. And it's almost four times the foreclosure total in 2000.

Most of the houses, condos and townhomes threatened with forced sale for unpaid loans are still valued below the area's average price. More than 80 percent of the foreclosure postings so far this year have been on properties valued at $200,000 or less, Foreclosure Listing Service reports.

But the number of more expensive homes sold each month on the courthouse steps has risen steadily. And there's been a jump in the last year, as tougher lending standards have made it harder to refinance higher-priced homes.

"It's very difficult to get one of these loans," Mr. Roddy said. "I have talked to mortgage brokers with clients who have great credit scores that have been turned down for jumbo loans."

So-called jumbo loans are made for amounts above $417,000.

Real estate agents who sell foreclosed properties say they are seeing a steady stream of more expensive houses come on the market.

"You can find foreclosures in fabulous condition above $500,000," said agent Seychelle Van Poole Engelhard with Keller Williams Realty. "A lot of them were built in 2004 and later."

Dallas County has had the greatest number of $1 million and up home foreclosures so far this year – 30 postings.

Denton County is second, with 18.

Out of the properties posted in the counties each month for foreclosure, between 40 percent and 50 percent are actually sold. In some cases, the foreclosure is delayed or the borrower works out new terms with a lender.

Connie Zetterlund, a Coldwell Banker Residential agent who sells a lot of distressed properties, said most of the foreclosed houses she sold last year were priced in the $200,000s and $300,000s.

"The most expensive I've ever sold was $750,000," Ms. Zetterlund said.

"The higher-end houses are coming up in the foreclosure list, that's for sure."

But even with the recent increases, "the average Joe is still the one feeling most of the pain of this foreclosure cycle," Mr. Roddy said.

More than half of the foreclosures in 2008 have been houses valued between $100,000 and $200,000.

Another 30 percent of the properties faced with forced sale were valued at less than $100,000.

"I'm working to sell several $20,000 foreclosure houses right now," Ms. Zetterlund said.

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