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Kirkland’s foreclosure rate on the rise

Kirkland may be one of the wealthiest communities in the state, but the city is not immune to the foreclosure trend affecting the nation.

Kirkland homeowners are now entering into foreclosure at a rate 54 percent higher than last year, according to RealtyTrac, an Irvine, Calif.-based company that keeps track of foreclosures. The rate was measured by comparing numbers from January through May of this year to those of the same period last year. For 2008, 14 homes in Kirkland have been repossessed by banks and 97 more have been listed by lenders as entering foreclosure.

While the speed at which Kirklanders are getting foreclosed on is on the rise, it is still less prevalent here than most places across the region and country. The Kirkland foreclosure rate for 2008 is one out of every 307 households. By comparison, the state average is one of every 234 households and the national average is one of every 106 households. A record 1.2 million U.S. homeowners are estimated to be in some stage of foreclosure.

After reviewing the numbers, Sandy Noll, a local Realtor with Keller Williams Realty, said she was not surprised Kirkland’s foreclosure rates are higher than last year and rising.

“Three years ago homes were selling for absurd amounts of money and borrowers were getting loans to buy them with adjustable rates, ARM mortgages,” she said.

The ARM mortgages, which offer low “teaser” interest rates, only to increase monthly payments later, have forced large numbers of borrowers into foreclosure and bankruptcy. Noll said she expects the local foreclosure rate to continue going up for the next two or three years before it levels off.

RealtyTrac calculated the numbers by tracking public notices and court documents of foreclosure proceedings within Kirkland’s three zip codes.

It is not just local real estate agents and banks that are anxiously following the worsening numbers. City Finance Director Tracey Dunlap said the high foreclosure rate came to light during the city’s recent budget planning process.

Facing the prospect of raising taxes and cutting services to meet its budget targets, the city’s finance department has kept a close eye on the worrying statistic. Dunlap’s staff was first made aware of the increased foreclosures late in the budget-planning process when it saw how utility billings could be impacted, she said.

Also tracking the situation is Jan Dickerman, executive director of Kirkland Interfaith Transitions in Housing (KITH), a nonprofit organization dedicated to fighting local homelessness. Her organization saw a 30 percent monthly jump in the number of people seeking help with housing in June. In addition to trouble with ARMs, higher gas and food prices are contributing to the squeeze, Dickerman said.

State legislators passed a law earlier this year that gives people on the brink of foreclosure more protections from scams and places more responsibilities on those trying to help them.

One of those people is Georgia Schoonover, a Bellevue real estate agent who works with Wells-Fargo Bank to sell homes before they go to auction. Now working with a Kirkland woman to sell her home before it goes into foreclosure, Schoonover said she is trying to sell it for less than the woman owes the bank -- a situation called a “short-sale.” But she said the bank will not give her an estimate as to how much it is willing to lose in the deal, which limits her ability to sell the home.

“I think the banks are pretty cold-blooded in this,” she said. “It’s like throwing darts at a number trying to get (a short-sale price the bank will accept) right.”

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