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Foreclosures now threaten once-immune St. Charles County

This article first appeared in the St. Louis Beacon, Nov. 19, 2010 - Foreclosure Red has now spread across Missouri and is threatening areas, such as St. Charles County, that avoided the first waves, according to an eye-popping series of charts presented by St. Louis Federal Reserve economist William Emmons Thursday at a foreclosure conference in St. Peters.

The charts, illustrate the growing numbers of Missourians who are delinquent on their mortgages either 30 days or more -- or are already in foreclosure -- in September 2006, September 2008 and September 2010.

St. Charles County is orange, which indicates 6 to 8 percent of mortgages in trouble -- but it is surrounded by a sea of red.

Emmons said that mortgage problems started in areas with the weakest economies, but that unemployment and falling house prices have now put stress on borrowers in areas, such as St. Charles County (closeup on local map below), with stronger economies.

"The root cause is the lack of equity," Emmons said.

When house prices fall, homeowners who have little equity in their homes can quickly find that their mortgages are now higher than the market value of their properties. The options are limited for financially strapped homeowners seeking mortgage modifications: Lenders will not refinance homes that are under water, and homeowners may not be able to sell the houses in a weak market.

Rising house prices would cure the problem, Emmons said, adding that he believed "they are more likely to fall than rise."

The conference was sponsored by the St. Louis Federal Reserve and the University of Missouri St. Louis and hosted by St. Charles County government.

Other speakers included assessor Scott Shipman who said that the highest concentrations of foreclosures in the county were in Lake St. Louis and Wentzville. He explained that a large percentage of the county's foreclosures were undeveloped land parcels owned by developers; 1,800 such lots are waiting for builders.

Shipman offered research indicating that the county's foreclosures aren't on the market for months and months as they are in some areas: The median number of days is 132 -- and sale prices fall backward by just 1.5 percent, he said.

About 150 people, including Missouri Attorney General Chris Koster, attended the breakfast meeting, held at the Old Hickory Golf Club.

To read a Beacon story on Koster's remarks about the 50-state investigation into foreclosures, click here.

Donna Redd, a Realtor with ReMax, said that she attended because she wanted to hear what other people think about the economic situation. She said that while the St. Charles housing market hasn't suffered to the same degree as other areas, buyers are nervous -- despite low prices and interest rates that make this a good time to buy.

She found the foreclosure statistics "a little scary" and wondered how high they might get.

"I don't think it's going to end any time soon," she said.

Mary Delach Leonard is a veteran journalist who joined the St. Louis Beacon staff in April 2008 after a 17-year career at the St. Louis Post-Dispatch, where she was a reporter and an editor in the features section. Her work has been cited for awards by the Missouri Associated Press Managing Editors, the Missouri Press Association and the Illinois Press Association. In 2010, the Bar Association of Metropolitan St. Louis honored her with a Spirit of Justice Award in recognition of her work on the housing crisis. Leonard began her newspaper career at the Belleville News-Democrat after earning a degree in mass communications from Southern Illinois University-Edwardsville, where she now serves as an adjunct faculty member. She is partial to pomeranians and Cardinals.

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