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Economy helps with foreclosure drop

Graphic by Amber Hiles / The Daily Republic This graphic shows the numbers of filings signaling the start of foreclosure proceedings in Davison County for the years 1997 to 2014.

As the economy continues to improve, the amount of foreclosures in Davison County hit a 15-year low in 2014.

There were just 16 foreclosure notices filed last year with the Davison County Register of Deeds, down seven from 2013 when 23 were filed and only 12 sheriff's deeds were transferred in 2014, the lowest number in the county since 2011.

Mitchell Area Development Corporation Executive Director Bryan Hisel said there is often a correlation between an improved economy and the decrease figures in foreclosures.

"Clearly the economy helps drive those numbers," Hisel said. "You look at the metrics and the economic data and you can see that having an improved economy has helped things immensely."

Mitchell had an unemployment rate around 3 percent for much of 2014, according to figures from the South Dakota Department of Labor and Regulation. There were also record years in taxable sales and gross sales in Mitchell last year, Hisel said.

Despite that, there will always be some cases of foreclosure because of change in economic status or people becoming house poor, where the owners can't afford the mortgage, the taxes or the costs of maintenance.

"Foreclosure really can be as individual as the person who is involved in it," Hisel said.

Terry Torgerson, senior vice president at CorTrust Bank in Mitchell on Havens Street, said tighter restrictions on home lending have had a role in decreasing foreclosures.

"It's much more stringent and as Congress and regulators have tightened things up, the stack of paperwork has gotten taller," he said. "A lot of that rise we had during the housing crisis was just people getting into homes that were more than what they could afford."

During the mid- to late-2000s, foreclosures in Davison County reached a recent high. There were 58 foreclosures in the county in 2007.

Another low foreclosure figure is the number of sheriff's sales. Davison County scheduled just five of the sales last year and two of them were cancelled prior to the scheduled date of sale. In 2013, there were 13 scheduled and nine were eventually cancelled. A common reason for cancelling is sometimes lenders and the homeowners work out an arrangement to refinance the home.

Kathye Fouberg, the Davison County Sheriff Office's Civil Deputy, said she's kept records regarding foreclosures for the last 10 years and the change of pace is rare.

"There's been a massive slowdown," she said. "That's really, really out of the ordinary compared to where we've been."

The foreclosure process starts with what is called a lis pendens, or a notice at the start of the foreclosure process. If the homeowners can make enough payments to avoid foreclosure, the process may end with the lis pendens filing. If the owner can't stop the foreclosure, the sheriff's office is responsible for auctioning the property is what is called a sheriff's sale, where anyone can go to the sale and try to outbid the lender. If not, the lender gets the home. Over the next six months to a year, a homeowner still usually has time to redeem the property. Otherwise, a sheriff's deed is executed and the ownership is transferred to the highest bidder or the lender.

Fouberg said there's been two sheriff's sales scheduled so far for 2015.

There's mixed signals about whether foreclosures will slow down in the next year on a national basis. Earlier this month, the real estate data firm RealtyTrac said the number of properties in foreclosure reached a 15-month high, when 37,292 homes were repossessed nationwide.

Torgerson said changes in regulations have made it more difficult for those in middle income positions to be approved for mortgages.

"You have some of those people who would have previously qualified who are now in the margins and are having a tougher time," he said. "The shortage of homes for middle income people is certainly a challenge for our community."

Hisel said the banking institutions in the community are smart and many potential buyers are too but federal one-size-fits-all regulations don't fit Mitchell. The single-family housing shortage, however, is a difficult one to swallow.

"Homes are either nonexistent or their too expensive," he said. And frankly, we're finding that smart couples and people who use common sense are in a trap in some regards in finding a home."

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