-28°

While thousands of homes in the United States are going into foreclosure, a mortgage company representative told Soldotna business leaders last week that only one residential foreclosure filing was made on the Kenai Peninsula in April, the most recent whole month statistics are available.

Aaron Swanson, of Residential Mortgage, said in the entire state of Alaska, one in 1,869 households were in arrears on mortgage payments -- mostly in Anchorage and the Matanuska-Susitna Valley.

"In California, it's one in 204," Swanson said. "In Nevada, it's one in 146," he said, adding Nevada has the worst situation of all states.

Addressing the question, "What's going on with residential foreclosures?" Swanson said one needs to look back five years to develop an answer.

Prime interest mortgages historically have had a delinquency rate of 1 percent, he said. In the industry, delinquency means no payment has been made in 90 days.

"At the end of the first quarter (this year), adjustable rate mortgages had a 24.1 percent delinquency rate," he said. "In 2002, sub-prime (mortgages) had an 11 percent delinquency rate."

He said the theory was, if people had a $1,000 house payment, with a pay option adjustable rate mortgage, they could pay one-third of the payment and the remainder would be taken care of by rising property values.

"Delinquency rates dropped to 6 to 7 percent," Swanson said.

However, then house prices leveled off. They were as high as they could go, he said.

Owed balances began increasing and lending institutions started requiring full payment. At the same time, interest rates rose.

"People walked away from their houses," Swanson said. Property values went down.

By 2007, delinquencies were back to 10 percent.

"Wall Street started seeing big mortgage companies begin to collapse," Swanson said. "They got a cash call and had nowhere to go to get the money."

He said about 200 companies went under.

"Places that had sub-prime loans were only getting 95 cents on the dollar from Wall Street," Swanson said. "They started filing bankruptcy."

In Alaska, he said, things are much better.

"In our market, interest rates are phenomenally good -- the fixed interest rate is 6 percent," Swanson said.

"There's a lot of money in our local economy due to oil prices," he said.

Swanson said builders in the area are "extremely busy" and lumber prices are the lowest they have been in five years, primarily because there is no building going on Outside.

When asked to describe the supply of available houses on the Kenai Peninsula today, Swanson said he was told by one real estate agent that there is a shortage.

"In our area, if you're (priced) at $200,000 or less, and the property is priced right and the quality is good, it's on the market for days," he said.

Swanson was complimentary of the performance of the federal reserve saying it "has done a phenomenal job."

"They've dropped the prime (interest) rate as much as they could. They held off the recession. There's been a soft landing, not a thump. And the federal loan rates are low now," he said. "This is a good time to borrow."

One member of the Soldotna Chamber of Commerce wanted to know if the problems being seen in the Lower 48 will come to Alaska in two or three years following a "traditional grace period."

"No," said Swanson. "Oil prices would have to drop drastically here."

Phil Hermanek can be reached at phillip.hermanek@peninsulaclarion.com.