WILLMAR -- The subprime lending crisis that has burst the housing bubble in the state's metropolitan area and led to a nationwide rise in foreclosures has sent ripples this way too.
The number of properties in the process of foreclosure or sold at sheriff's auction this year is up in the west central area, according to county recorders.
Meeker and Swift counties have seen the bigger increases. In other counties, the recorders reported small to modest increases.
That is the case in Kandiyohi County. It has seen 112 notice-to-foreclose documents this year to date, with 69 of them having gone to conclusion at a sheriff's sale, said Julie Kalbrenner, county recorder.
She said that the number is up from previous years, but it is not a dramatic rise. Records for the past five years show that the number of annual foreclosure notices ranged from 90 to 110.
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"It is not as much of an issue (here) as it is nationally or even in the Twin Cities metro area,'' said Greg Hilding, president of the Bremer Bank in Willmar, of the subprime lending crisis.
The areas that have been hardest hit are those that had previously experienced a "rolling boom'' in their housing markets, according to Pareena Lawrence, an associate professor of economics at the University of Minnesota-Morris. They are areas -- such as the metropolitan counties -- where a rapid influx of people heated the housing market and inflated prices.
Real estate values here tend to rise and fall at a slower, steadier pace, Hilding said.
Also, he noted that housing values here do not usually include the speculative values that were apparent in some of the troubled mortgages in the metropolitan markets.
Yet rural areas have not escaped unscathed. A report issued by the Greater Minnesota Housing Fund of St. Paul earlier this year found that in the 80 counties outside of the metropolitan area, the number of foreclosures totaled 11,207 in 2006. That's twice the number that had been anticipated, and it led the study's sponsors to project even higher numbers for 2007.
The study found that the rate of foreclosures in outstate Minnesota was highest in the "collar'' counties around the metropolitan area.
That might help explain the situation in Meeker County, where the number of notice-to-foreclose documents has grown steadily over the last five years. County Recorder Elaine Lenhard has seen the number grow from 27 in 2002 to 114 in 2006. So far this year there have been 113 documents filed, she reported.
Swift County has 24 foreclosure documents for the year, which is a significant increase compared to previous years, according to Donna Lilleberg, county recorder. The number of foreclosure notices -- and the value of those properties at more than $1.7 million -- is larger than anything the county has seen since the farm crisis of the 1980s, Editor Reed Anfinson of the Swift County Monitor-News wrote out in a news article.
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The Swift County foreclosure notices include four properties in Benson and 10 in Appleton.
Other counties in the area have seen a rise in the number of foreclosures over the last four or five years, the recorders said.
Over the previous four years, the number of foreclosure documents in Yellow Medicine County grew by about 25 percent, according to Recorder Kay Zempel. But that's not to suggest there is a crisis: At this point for 2007, there are only 11 foreclosure documents, she said.
In neighboring Chippewa County, Recorder Diane Ketelsen has seen 14 foreclosure documents this year. That is a definite increase, she said, noting that a few years ago it was more common to see only four or five per year.
In Lac qui Parle County, there are seven notice-to-foreclose documents filed at this point, according to Josh Amland, recorder.
The ripples from the subprime lending crisis will continue to be felt. Many people with subprime mortgages are finding that the interest rates on their adjustable rate mortgages are rising faster than the value of their homes or their incomes.
Hilding said people finding themselves in a subprime lending situation may want look at community banks as a resource to help them develop a strategy. Community banks know the local market and can provide a realistic assessment of their best options.
Lawrence said the fact that community banks are responsible for the lion's share of mortgages in rural areas can help explain why rural areas are being spared some of the problems now seen in urban markets. She quoted one mortgage consultant who stated that her clients are also the people that she bumps into at the grocery store or church. "She wants to give people the best mortgage she can,'' Lawrence pointed out in an e-mail to the Tribune.
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The vast majority of people in this region have mortgages that fit their income portfolio, according to Hilding.
As a result, he and Lawrence both said they are confident that the market will sort things out. They do not expect any dramatic economic "hit'' due to the subprime situation.
Lawrence urged that people keep the numbers in perspective. The number of foreclosure actions reflects a very tiny percentage of the overall number of mortgages. She expects housing prices to eventually stabilize and increase at a more sustainable pace.
