The number of home-mortgage foreclosures filed in Spokane County this year is well ahead of last years pace and is on course to top 1,000 for the second straight yearfor just the second time since the county started tracking defaults in 1977.


Meanwhile, after studying foreclosure trends for the last year, Spokane Neighborhood Action Programs, a nonprofit, affordable-housing advocate here commonly referred to as SNAP, believes theres a correlation between the surge in foreclosures and an increase in subprime loans, says Ray Rieckers, an assistant director for SNAP.


Through last month, 688 foreclosures on deeds of trust for single-family homes had been filed in Spokane County. That was up almost 20 percent from last year, when the county recorded 574 defaults through the first seven months.


If that pace continues, 1,180 homes would fall into foreclosure here this year, or almost 100 a month. Last year, a total of 1,000 foreclosures were recorded here, which is the highest mark on record.


For added perspective, there are about 119,400 single-family homes in the Spokane area, according to the spring 2001 edition of The Real Estate Report, published by the Spokane-Kootenai Real Estate Research Committee. At the current pace at which homes are being foreclosed on, roughly one of every 100 single-family residences here would be foreclosed on this year.


Experts had predicted last year and again at the beginning of this year that foreclosures here would level off, and theyve been perplexed at why those numbers continue to rise. Preliminary results from SNAPs foreclosure study, however, show that the total number of foreclosures and the number of subprime loans last year were both about 13 times higher than in 1993. Foreclosures on conventional loans have increased in the period as well, though to a much smaller degree, Rieckers says.


Subprime, or nonconventional, loans generally carry higher interest rates and upfront fees and are issued by companies that are more tolerant of risk than a conventional lender, Rieckers says. Also, he says, borrowers who take out such loans typically have blemishes on their credit records that prevent them from borrowing money from conventional lenders at lower interest rates.


SNAPs research also found that homeowners who ended up in default had taken out an average of three loans on their homes, up from an average of two loans eight years ago.


Rieckers says that in one extreme case, a homeowner had taken out 14 loans on the same house over a 10-year period before defaulting last year.


Such multiple-loan activity includes standard refinancings, but in many cases, it also involves some sort of home-equity loan in which homeowners use equity in their homes to pay off revolving-credit debts, or other types of loans in which they fold other debts into their home mortgage. In most instances, those loans are subprime.


Essentially, theyre paying for tennis shoes, for example, over 20 years, says Rieckers. He adds, Its pretty clear that people need to be better educated on finances.


Marj Dahlstrom, executive director of the Spokane Low Income Housing Consortium, has been assisting with SNAPs study. She says that when several loans are taken out on a home, the amount owed can become greater than the value of the home. If homeowners find they no longer can pay their monthly mortgage payment, they often choose to walk away from their homes and default, she says. Such scenarios seem to be more common in parts of the Spokane area where home values havent appreciated much during the past decade, she says.


Peggy Burrell, manager of SNAPs mortgage-assistance program, says the organization has gathered all of the raw data it needs for the study and now is contacting former owners of the surrendered properties it has researched. It hopes to interview them and find out what events, such as divorces or medical emergencies, might have contributed to their foreclosures.


For the study, SNAP researched about 360, or about one-third, of the homes that were foreclosed on last year. For comparison, it also researched about half of the 70 properties that went into default in 1993.


It hasnt set a date by which it expects to complete the foreclosure research project, Burrell says.