Kansas foreclosure rates higher than national average

Associated Press

TOPEKA, Kan. - Kansas has higher foreclosures rates on homes than the national average for almost all kinds of mortgages, according to the regional director of a nonprofit group dedicated to community revitalization.

John Santner, district director with NeighborWorks America, which was created by Congress, said that as recently as December, there were 4,220 homes in foreclosure in Kansas and an additional 7,385 home loans were seriously delinquent, meaning more than 90 days past due. A total of 1.32 percent of all mortgages were in foreclosure in Kansas in late 2006, compared with 1.19 percent nationally.

Robert Baker, counselor and education coordinator with Housing and Credit Counseling, said some Kansas residents have credit card debt and are facing job losses, reduced income and medical problems.

"The middle class is getting squeezed," Baker said. "They've become accustomed to a lifestyle that they can no longer afford."

Across the country, people have little savings. The U.S. Commerce Department's Bureau of Economic Analysis said Americans spent more than they earned in 2005, creating a negative savings rate of 0.5 percent for the year.

When it comes to home loans, one trouble spot has been the subprime adjustable rate mortgages offered to buyers with poor credit.

The interest rate is low at first, but it goes up in the second or third year, increasing monthly payments by up to 30 percent, Santner said.

"This escalator clause is rarely explained to anyone," said Steve Hermes, management consultant for communications and public affairs for NeighborWorks America in Kansas City, Mo.

A recent study by the Center for Responsible Lending suggests almost 20 percent of Kansas' subprime loans could end in foreclosure.

Jerry Brown, general manager of Kaw Valley Home Loans Inc., a subsidiary of Kaw Valley State Bank & Trust in Topeka, said about 25 percent of the institution's mortgages are subprime loans.

"Normally we try to do a fixed rate, but that is not always possible. It's the customer's option," Brown said.

Brown and Marilyn Stanley, spokeswoman with Housing and Credit Counseling in Topeka, said they see families spending up to 50 percent of their income on housing, although experts suggest no more than 30 percent.

"That doesn't leave room for gas and utilities," Stanley said.

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