For many in town, a building boom goes bust
Of all of the cities in Dakota County, Farmington tops the list when it comes to foreclosure rates. 2010 was the second consecutive year the city had Dakota County's highest foreclosure rate.
According to a Jan. 19 report from the Dakota County Community Development Agency, Farmington ranks fifth in the total number of foreclosures, with 206 sheriff sales in 2010.
The reason for Farmington's high foreclosure rate seems to lie in the explosive growth the city experienced early in the 2000s.
Farmington experienced perhaps the biggest housing boom in its history in the few years after the turn of the century, adding hundreds of new homes annually. In 2002 alone, the city issued 582 new single family and townhome building permits another 539 came in 2003. In some of those cases, the buyers were over-qualified and bought larger homes than they could afford.
Then the market shifted. The economy bottomed out, and everything seemed to change at once. Unforeseen financial burdens like divorce, loss of jobs or reduced hours, or even medical expenses left some homeowners no longer able to make their mortgage payments. Before long, foreclosures in Farmington and around the county started to crop up almost as quickly as all those new homes had just a couple years before.
The unforeseen financial burdens at first seemed to affect those who had been over-qualified and bought larger homes. Then interest rates on those short-term adjustable-rate loans increased, affecting a different lot of homeowners. These days, the housing market has been poor for so long that even some homeowners with traditional 30-year loans are feeling the pinch, Dakota County CDA assistant director of administration Sara Swenson said.
"It's really hard to predict foreclosures. You don't know everybody's personal situation," Swenson said.
Overall, Dakota County had 2,147 sheriff sales in 2010, up from 1,860 in 2009. The increase seems large, but Swenson points out that there was a moratorium on foreclosures in late 2009. Some of those foreclosures may have carried over from 2009 to the early part of 2010, making the county's numbers balloon.
Farmington led in foreclosure rates in 2009, with 2.60 percent of the households in the city subjected to sheriff sales. In 2010, Farmington's foreclosure rate rose to 2.95 percent.
Notices of Pendency
Farmington also leads the county in Notices of Pendency. According to the CDA's January report, NOPs are official notification the foreclosure process has begun, though not all notices lead to sheriff sales.
Farmington ranks fifth in the overall number of homes in pendency with 346 NOPs in 2010 - compared to an actual county high 557 in Lakeville - but again jumps to the top of the list, with 4.96 percent of the homeowners receiving Notices of Pendency last year.
Countywide there were 3,614 notices of pendency last year.
The CDA tries to get to homeowners who receive NOPs, Swenson said, to find ways to help them avoid going into foreclosure. The Mortgage Foreclosure Prevention Program offers information about the foreclosure process and can suggest options to homeowners in jeopardy of losing their homes. A call to the Homeowner Hotline, 651-675-4555, can get the process started.
The CDA is also offering an evening of free walk-in foreclosure counseling for homeowners on Tuesday, Feb. 22, from 3:30-6:30 p.m., at the Apple Valley Municipal Center, 7100 147th St. W., in Apple Valley. The event is an open house and no reservations are necessary.