Porter County foreclosures triple in decade to 493 in 2007

Former Courts Clerk Dale Brewer recorded 192 foreclosures through her offices in 1999, and that increased to 406 in 2003, the last year she had time to keep those records.

"It looks like it started in 1999 to pick up," she said. "What I was seeing was all different kinds of people."

Kathy Nichols, the Porter County Sheriff's Warrant Division and Civil Bureau Supervisor, has similar numbers, from 152 sales orders of houses in 1999 to 493 in 2007.

"Those are the ones that have been set for sale," Nichols said.

Some foreclosures are worked out before they reach the point of a sheriff's sale, so it's likely there were more. "It could be people are relying on credit too much," Brewer said.

Changes in the lending and mortgaging system, plus unregulated mortgage companies, are probably the biggest factors, according to Bill Vaughn, vice president at First National Bank of Valparaiso, and Allen Watkins, owner of Choice Home Realty and Housing Resource Center in Lake Station. "The high tide hasn't hit yet. I think there's more to come," Vaughn said.

Watkins, who has bought homes and offered foreclosure alternatives in Porter County for 11 years, blamed lenders being overly flexible in guidelines in subprime markets.

As the competition for borrowers increased, lenders gave high-risk loans to people with low credit scores, he said.

The adjustable rate mortgages have scheduled increases regardless of markets, Watkins said.

"When those payments go up, either people can't pay it or they get frustrated and stop paying," Watkins said. "It was a simple recipe for failure."

Federal guidelines wouldn't allow banks to make the same loans unregulated mortgage brokers did, Vaughn said.

"They were loaning more than the value of the homes," sometimes up to 125 percent of the value, he said.

That partly fed the nationwide housing boom, he said. Where banks require 20 percent down or an insured mortgage, the mortgage brokers weren't regulated then, Vaughn said.

Some banks bought those mortgages, but many brokers aren't around, and legislators are discussing regulations.

Watkins also noted that other factors that may have contributed to the increase.

"The No. 1 reason for foreclosures, typically, is divorce," he said. If divorces increase, so will foreclosures.

He also blamed the growth in casinos and increased property taxes. "It takes money out of people's pockets and effects the bills they can pay," he said.