The darkest days of the Treasure Valley's foreclosure crisis appear to be over.
In Ada County, the notices of default filed with the Ada County Clerk's Office reached a five-year low of 361 in the first quarter of 2013, down from an all-time high of more than 1,400 in the same quarter in 2010, according to foreclosure listing service, Idaho Data Providers. In Canyon County, they fell to 234 from nearly 1,000.
That's partly because many distressed properties have already been foreclosed upon, said Gerald Hunter, executive director of Idaho Housing and Finance Association. The nonprofit association provides loans and financial services for state residents who qualify for low- and moderate-income housing under U.S. Department of Housing and Urban Development programs.
Homeowners struggling to make payments have more lifelines than in years past, including federal refinancing and mortgage-relief programs.
More Idaho homeowners are also turning to Idaho Housing for free foreclosure prevention counseling and for help to decode the legalese of mortgage paperwork and foreclosure law, Hunter said. The association provided counseling to 2,732 Idahoans last year and is on pace to match that in 2013.
"A lot of what we do is helping borrowers understand what their options are, what their rights are, how to interface with the lending institutions," Hunter said. "Knowledge is very empowering for people in a delinquent state who feel like they've lost everything."
HELPLESS NO MORE
Like many homeowners fighting foreclosure, Bruce Cofer felt as if he were driftwood and the process was the coming tide.
Cofer, 65, is retired now but owned and operated a small lawn-care business when the recession started in 2008. He said he owed more on his mortgage from HFC Beneficial for his home than the home was worth after its value dropped from $180,000 to about $135,000.
Cofer said he'd also taken out a line of credit with Beneficial to pay $15,000 for lawn-care equipment and another $30,000 to cover his wife's two surgeries.
The couple were tapped out. They cut extra expenses such as cable TV, a storage unit and their telephone landline, but they were still unable to make monthly payments of $1,400 for the mortgage. Cofer said Beneficial approved a yearlong loan modification in 2010 that reduced his monthly payment, then an additional eight-month modification. But as the second modification was running out, Cofer couldn't get anybody from the lender to talk to him by phone to discuss the third modification he'd need to keep making payments.
The real worrying started after the second loan modification expired. The monthly amount Cofer owed returned to more than $1,400.
After four months, Cofer owed more than $5,000 in underpayments and late fees. Cofer said Beneficial never used the word "foreclosure," but he was sure that was the next step.
"I knew I was in trouble there, bad trouble," Cofer said. "I didn't know what to do about it. I wasn't getting any options from the mortgage company. I was just getting the runaround."
Beneficial did not return a telephone message seeking comment.
Cofer called Idaho Housing on a friend's suggestion and went to the Boise office for free mortgage counseling. The counselors explained to Cofer that he had rights in the negotiating process. The news came as a relief.
Idaho Housing was able to contact Beneficial and negotiate a new, two-year loan modification. Cofer said the interest rate dropped from 9.3 percent to 3.5 percent, lowering Cofer's mortgage payments to $964 a month and allowing him to keep the house.
Taxes and homeowner's insurance - which weren't included under the terms of previous modifications - were now included in monthly payments, Cofer said.
"I don't know if the (mortgage company) thought I would throw up my hands and say, 'Take the house,'" Cofer said. "But when Idaho Housing got involved, they seemed to pay attention a little more, to try a little more."
Cofer said the original terms of his 30-year loan will return when the modification expires in 2014, but that's a worry for another day.
Federal programs through the Federal Finance Housing Agency have also helped homeowners avoid foreclosure.
The Home Affordable Refinance Program, or HARP, and its successor, HARP 2.0, allowed homeowners underwater on their mortgages to refinance at recent interest rates, the lowest in decades. Refinancing changes terms of a loan, often lowering monthly mortgage payments by lowering the interest rate or extending the payment terms.
The only homes eligible for HARP programs are those with mortgages owned or guaranteed by Freddie Mac or Fannie Mae, government-sponsored companies that own or guarantee more than half of all U.S. mortgages. Freddie and Fannie buy mortgages, then bundle fractions of mortgages together and sell them to investors.
As of February, more than 2.3 million homeowners nationally have refinanced using HARP loans, according to the Federal Housing Finance Agency. Of those, 21,685 were from Idaho.
Jumbo mortgages - classified in Idaho as loans exceeding $417,000 - are not eligible.
The original HARP program disqualified people whose mortgage debts exceeded the value of their homes by more than 25 percent. Hunter said HARP 2.0, which started in December 2011, expanded eligibility by removing that restriction.
"So many homeowners were under water so far that their loan-to-value ratio exceeded that level," Hunter said. "That really opened up the program."
Mike Mooney, Idaho regional president of Bank of the Cascades, said HARP 2.0 gave banks a way to refinance more homes.
"There's nothing good about taking back a home," Mooney said. "It's good for banks for homeowners to stay in their homes. It's good for the economy and it's good for borrowers. I think everybody wins."
NATIONAL MORTGAGE SETTLEMENT
State attorneys general were inundated with complaints about the foreclosure practices of mortgage lenders in the years following the housing market collapse.
The Idaho Attorney General's Office fielded 725 complaints from 2009 to 2012 about lenders engaging in abusive foreclosure practices, including "robo-signing," or signing documents en masse without reviewing them. Other complaints included lenders refusing to take calls from homeowners and foreclosing on homes shortly after agreeing to loan modifications.
In 2011, the attorney general issued a report on foreclosures in Idaho noting that 1 in 21 properties in the Boise-Nampa area received a foreclosure filing in 2010, making the area one of the nation's most affected by the foreclosure crisis.
Those problems were documented nationwide. In 2012, the federal government and 49 state attorneys general settled with the five largest mortgage lenders: Bank of America, Wells Fargo, JPMorgan Chase & Co., Citigroup, Inc. and GMAC/Ally.
The $26 billion settlement was the largest consumer protection settlement ever and required the lenders to provide $20 billion in mortgage relief to homeowners; $1.5 billion will be distributed to some homeowners that were foreclosed upon by the big five lenders. The remaining settlement money will be distributed to the 49 states to support foreclosure prevention and education programs.
So far, 2,810 Idaho homeowners have received nearly $168 million in relief from the settlement, according to the national Office of Mortgage Settlement Oversight.
The $26 billion settlement is separate from a $9.3 billion settlement between federal regulators and 13 major lenders.
The average borrower in the $26 billion settlement received nearly $60,000 in relief in various forms, including loan forgiveness and approval of short sales, refinancings and loan modifications. Banks do those things sometimes anyway, but the settlement gave banks incentive to approve borrower-friendly agreements, said Brett DeLange, chief of the consumer protection division of the Attorney General's Office.
"Would banks have done the same (number of agreements) absent the settlement? I don't think so," DeLange said.
The big five lenders also agreed to clean up their business practices as part of the settlement. Part of that was establishing a point of contact for borrowers who struggled to get their calls returned.
DeLange said mortgage lenders are still his office's No. 1 source of consumer complaints, and communication problems linger; however, the number of complaints dropped from 353 in 2009 to 129 last year.
"That's a dramatic improvement," DeLange said. "Are we where we want to be? No. But compared to before, we're pleased. We're moving in a good direction."
Hunter said default filings are nearing pre-bubble levels and should stay there as long as the state economy remains stable.
"There are still some foreclosures in the pipeline, but those numbers are coming down," Hunter said. "I'm delighted to be where we are right now."
Zach Kyle: 377-6464