If recent trends and forecasts hold true, 2007 could see many homeowners having trouble paying their mortgages, with the end result being foreclosures. According to RealtyTrac.com, an online source that collects foreclosure data, the United States saw nearly 1.2 million foreclosures in 2006, up 42 percent from 2005-one foreclosure for every 92 households. The State of Wisconsin ranked 32 out of the 50 states, seeing 7,572 foreclosures, a 48 percent increase from 2005-one foreclosure for every 304 households. The beginning of 2007 saw little hope that these numbers would get better. Wisconsin saw 837 foreclosures in January. Although February numbers dipped 3.91 percent from January's increase, February 2007 foreclosures saw an 11.64 percent increase from February 2006. The trends don't look promising for the rest of 2007 either. Based on the trends at the end of 2006 and beginning of 2007, RealtyTrac's CEO James J. Saccacio predicts a 33 percent increase in foreclosure rates over 2006. "It appears that as subprime loans and FHA lands default at higher than anticipated rates, and lenders tighten their underwriting standards, we're going to continue to see a spike in the number of homeowners facing foreclosure," Saccacio said. Barron County sees its fair share of foreclosures as well. The Barron County Sheriff's Department currently lists 12 properties going to sheriff's sale between now and the beginning of July. One of those properties is in Chetek. RealtyTrac lists 19 properties as being in some process of foreclosure in Barron County-seven of which are listed as auctions, and another five are listed as bank-owned properties in Chetek. "I have seen a substantial increase in foreclosures over the last several months," said Barron County Deputy Curtis Arnold, who works on processing the sheriff's sales in the county. "I usually do a few, but we've picked up some lately. On a weekly basis I probably work on one or two foreclosures." Arnold explained that the county tries to do no more than six properties per sale, which usually occur the first and third Thursdays of the month. He also explains that Barron County foreclosure rates are likely on track with average Wisconsin rates. A look at the numbers in Barron County actually show little change in the past year. There was a total of 56 sheriff's sales in 2005, and 55 in 2006 in Barron County, with an average of 4.5 sales per month in 2006. The numbers for the last quarter of the year actually show numbers decreasing, with an average of 5.2 sheriff's sales in the final quarter of 2005 and 4.6 in the final quarter of 2006. Time will tell if these numbers will rise throughout the rest of 2007, whose numbers seem to be on track with the previous year. January 2007 saw five sales, whereas February 2007 saw only four in Barron County. Both numbers are an increase of one sale per month from January and February 2006. The reasons... While the numbers are not at historic heights, they do prompt concerns for many homeowners who may be looking at buying a home, or are currently finding it difficult to make mortgage payments. According to Corey Sheplee, a loan officer with Sterling Bank in Chetek, a lot of problems stem from adjustable rate mortgages, or ARMS. "In general, foreclosure is on the rise," said Sheplee. "A couple years ago when rates were down, people were able to get an adjustable rate loan at a rate of maybe 4 percent. Three years later, with rates increasing and adjusting, some people are finding they can't afford the payments. Most people on a 30-year fixed rate loan are fine, unless they've lost a job or something major has happened. You can talk about the economy being bad, but that isn't as much of a problem as the ARM loans." To keep major problems from arising, many banks are taking precautions to make sure that they don't end up owning a house. Some banks are finding that the problem is not in having enough collateral as much as it is in the ability to pay the monthly bills, especially with gas prices on the rise. Often times, individuals will acquire significant credit card debt to absorb some of the monthly costs of living. These high balances often get homeowners in trouble. Sheplee also explained that many homeowners gained appreciation on their homes because of higher real-estate values. Because of economic concerns, many will refinance their loans, and take out money from the equity they've gained on their property's appreciation to pay for other things. Today, many property values have not seen a significant increase, so the extra funds homeowners were using to pay off other debts are no longer available. In Chetek, with property taxes being what they are, many homeowners also find it difficult to afford their properties and opt to sell. If a property doesn't sell, but the homeowners buy another home, they end up paying the taxes and payments on both sets of houses. Often times, subprime customers find themselves in a foreclosure situation. These are customers who may have a poor credit score and are more risky, but are loaned the money anyway, often at higher interest rates. Subprime loans represented about 11 percent of Wisconsin's 567,488 outstanding mortgages in December, according to the National Delinquency Survey issued by the Mortgage Bankers Association. The Wisconsin State Journal also reported that the survey found that Wisconsin had 5.65 percent of its subprime loans in foreclosure at the end of 2006, higher than the national average of 4.53 percent. Of all mortgage loans, the state had 1.42 percent in foreclosure, above the national average of 1.19 percent but lower than the five-state regional average of 2.38 percent. Sheplee explains that most community banks will not do subprime loaning. In fact, he also states that many community banks in the area go through very few foreclosures. Both First National Bank of Chetek and Heritage Credit Union representatives say they have had do deal with very few foreclosures in recent years. Sheplee offers the same sentiments, and notes that many of the foreclosures do not end up happening with community banks. "If you look at the properties in foreclosure, many of the lenders are not local institutions," said Sheplee. "I think a lot of that stems from the fact that many local banks look out for their customers, and wouldn't let their patrons get into a situation like that. Many of those mortgage companies who see foreclosures probably don't always have the best interest of their customer in mind-they are just looking to get the loan approved." The foreclosure process To have a house go into foreclosure is not something a bank or a homeowner wants to have happen. Therefore, many banks will continue to work with a home owner to prevent this from happening. However, in the event that a mortgage is not being repaid, the bank can begin the foreclosure process anywhere from 60-90 days after a payment has not been made, depending on the bank, the customer, and their situation. For instance, if a customer has a history of making significantly late payments, after a month of deliquesce, a bank may chose to take action early. If a bank chooses to foreclose, they must send a Right to Cure after that period, outlining what needs to be fixed and by when it needs to be fixed before the bank will go through the legal process of foreclosing on a house. A customer generally has two to three weeks to satisfy those terms before the bank will make the decision to continue and contact their attorneys who file with the county courthouse. Even once the paperwork heads to the attorney, a foreclosure can be cancelled or adjourned to another day. If at any point the homeowner can repay the debt owed, the process can end. On the flip side, Sheplee has followed foreclosures that are ended the day before, even hours before, the sheriff's sale, because the homeowner files for bankruptcy. Typically, however, once foreclosure notice is given to the bank's lawyers, it takes approximately three to four months before the property will end up at sheriff's sale. Tips for avoiding foreclosure For those individuals who are dealing with late payments or unforeseen circumstances, and are faced with the possibility of foreclosure, or those who simply want to keep their credit score high, there are hints and help to avoid any unfortunate situations. Alta Leverson branch manager of Heritage Credit Union in Chetek offers the following tips-some obvious, but nonetheless important-to avoid foreclosure on a home: * Make payments on time; * Do not overbuy when purchasing a home. Be careful with the type of loan, especially interest-only loans; * If a problem occurs, please stay in contact with your lender and be honest with them; * If a problem occurs, check for other possible cash flow such as borrowing against a 401K or a life insurance policy which have lower interest rates; * Sell the home yourself and pay the first mortgage and any other mortgages off so that the equity you have built up in the home is yours to keep.