Foreclosures peak last year

Photo: Repro

In the four years of Postimees collecting foreclosure statistics, the number has never been so high. Last year it seemed the 833 foreclosures of 2011 might be the ceiling. However, 1,300 people lost their real estate in 2012, 56 per cent rise year-on-year.

Small comfort to the abovementioned 1,300, but of the overall loan portfolio, the percentage of bad loans was still quite marginal.

«As of December 31^st 2012, SEB had granted 39,945 home loans, out of which 808 (2.02 per cent) were in arrears, nearly 700 of those for more than a year,» said Triin Messimas, Business Development Manager of SEB Private Loans. Ms Messimas underlined, however, a positive trend: the number and percentage of long-term arrears is in steady decline. «Only a small percentage of long term arrears end up in foreclosure – with most of the clients, we find another solutions,» said Ms Messimas.

Asked how to explain a record number of foreclosures at a time when it seems people are starting to do better, the banks have another sure answer. It could be called a mortgage peak, so to say – with real estate of people, whose problems started years ago, finally foreclosed.

«There is, usually, quite a long period of time from the beginning of problems to foreclosure. As a rule, these clients hit solvency problems in the downturn, and the solutions offered by banks have not, over these years, lead to a result. With insolvent customers, foreclosure is the last option for us,» said Swedbank’s spokesman Mart Siilivask.

In order to keep a check on percentage of bad loans in the future, the banks have started to forsake the so-called loose business practise. The Swedbank CEO Priit Perens told Postimees’ reporters at a radio discussion last week, that the bank no longer accepts applicants’ relatives’ real estate as collateral for a loan. In other words – granny’s summer cottage can no longer be pawned, for in the downturn days, many a guarantor fell into bailiff’s claws.