Bank Foreclosure Not Avoided Thru Bankruptcy Filing in Texas

by Peter Vernon on States

Bank foreclosure has not been avoided by many distressed homeowners in Texas who filed for bankruptcy protection primarily to save their homes from foreclosure.

According to a report compiled by an Addison-based foreclosure analysis firm, a total of 12,170 distressed homes were included in bankruptcy cases filed by homeowners in 60 counties in Texas. The number marked an increase of nine percent from the 11,171 properties included in bankruptcy filings in 2008.

The report examined bankruptcy cases filed in courts in Dallas, Houston, Fort Worth, Austin, Sherman and San Antonio. All in all, the value of properties involved in the bankruptcy filings in 2009 reached $2.28 billion, a sharp jump of 26 percent from $1.92 billion in 2008.

According to the analysts, most of the homeowners who filed the cases were not able to save their homes from mortgage foreclosures and tax lien foreclosures because they failed to comply with the home loan payment schedules set by the court trustees. Typically, once the properties lose bankruptcy protection, they are immediately put into the bank foreclosure process.

In 2009, the Forth Worth bankruptcy court, which handles cases filed by residents of Comanche, Tarrant, Hood, Erath, Jack, Wise, Parker and Palo Pinto counties, processed 3,154 properties involved in post-bankruptcy filings. The total dollar volume for these properties, using assessed value, reached $464.5 million, marking an increase of 10 percent from the 2008 assessed value of $420.4 million.

In Dallas, a total of 4,764 homes were involved in bankruptcy filings in 2009, marking a 21-percent jump from 3,592 properties affected in 2008. The total dollar volume rose by 38 percent in 2009 to $757.9 million, compared to $548.4 million in the previous year.

Bankruptcy rates rose in Texas in 2009 as the statewide jobless rate increased. In December, it hit 8.3 percent, rising from 8 percent in November. Despite the 50,000-job increase in the last quarter, the unemployment rate still climbed up because employers across Texas cut down 23,900 jobs.

According to Tom Pauken, chairman of the Texas Workforce Commission, the job markets with the biggest losses in 2009 were the trade, utilities and transportation sectors, accounting for 7,400 job losses. Despite generous tax credit programs given to businesses, many of them still were not able to save jobs.

Nonetheless, despite the job losses, according to Pauken, the economic situation of Texas remains much better than states struggling from bank foreclosure and double-digit unemployment problems.