A wave of home foreclosures has swept through communities around the nation, but Kinston and other parts of North Carolina have been spared much of the devastation seen in other housing markets.

That's not to say the picture is completely rosy. Documents in the Lenoir County Register of Deeds' Office showed that 59 properties, single-family and mobile homes plus vacant lots, have been foreclosed on in Lenoir, Kinston, Pink Hill and La Grange this year, as of May 31.

Records showed that 80 local properties were foreclosed on in all of 2006. Foreclosures picked up in 2007, as was the case all over the United States as the meltdown of the subprime mortgage market began. Records showed that 110 foreclosures took place that year.

Local realtors and lenders said this week that the foreclosure crisis of the past two years, driven by skyrocketing property values that suddenly crashed in a slew of mortgage defaults, has had much less of an effect on Kinston and Lenoir's housing market than other factors, including Hurricane Floyd and about a decade's worth of job layoffs.

"We never had the big inflated (housing market), so we didn't have far to fall," said Kathy Riggs, a realtor with Walter Poole Realty of Kinston. "The market is stable and it's improving; at least from where I'm sitting it is."

Mortgage banker Bobby Boykin serves as director of operations for East Carolina Mortgage, a subsidiary of Columbia, S.C.-based First Choice Mortgage. From the company's Kinston office, Boykin oversees branches serving Greenville, New Bern, the Charlotte area and Florence and Myrtle Beach, S.C.

"I don't know that it's impacted the Kinston market as much as the larger markets," he said.

Boykin stressed that his observations are based only on his personal experience working in the various real estate markets. He noted that the amount of foreclosed homes in the two South Carolina areas is much higher than in North Carolina.

"I don't think North Carolina has suffered as bad as some other areas have, but it's definitely an up-tick from what it was two to four years ago," he said.

Shannon Foster, vice president of Kinston's Foster Realty, said Kinston's market is a "different world" from most other communities, even those that are a short distance away such as Greenville and Goldsboro, where homes are about 35-40 percent more expensive than in Kinston.

Foster said recent announcements about new manufacturing and agricultural jobs have buoyed Kinston's real estate sales, though.

"In the last two months, the market has picked up," he said. "Spirit and Sanderson have spurred a renewed interest in the market."

Creating difficulties

While foreclosed properties are not much more difficult to sell than those that aren't, they have a significant effect on the value of the property, plus those around them. That translates into less money for realtors.

Realtors can sell a property once the bank has completed the foreclosure process. They are known in the trade as REOs, or Real Estate Owned by banks, Riggs said.

She explained that the mobile home sector has taken the worst hit; trailers that have been foreclosed on often sell for about $30,000 less than another trailer just down the street.

The value of a single-family home also drops significantly after foreclosure. Riggs said that homebuyers can typically request an inspection of the property and ask the seller to perform any necessary repairs before the purchase is complete.

Properties that are bank-owned must be sold "as is," she said, meaning the buyer must take it in its present condition.

Foster said owners facing foreclosure will "beat the property up" in some cases. That lowers the value even further.

"It has an impact when they sell for significantly less," he said. "It hurts the market."

The advantage goes to the buyer, who picks up a great deal. Foster said many buyers of foreclosed homes are investors looking for an affordable property they can convert into rental units or flip --- repair and resell for a higher price.

Realtors earn a 6 percent commission on every transaction, though, meaning the lower the sale price, the less money realtors make, Foster said.

"It ultimately all comes down to pricing," he said.

Mortgage lenders have tightened their credit requirements after so many borrowers defaulted on their home loans.

Boykin's company, East Carolina Mortgage, crafts homebuyers' loans, then sells the "note" to a secondary service provider. The borrower makes all payments to the secondary provider.

Boykin explained that the service providers his company sells to have tightened their credit rating and score requirements, meaning less people can qualify for loans.

"People who qualified a year ago may not qualify today," he said.

Prevention is the best medicine

Foreclosures occur when a homeowner can no longer make his or her mortgage payments. The loan is considered defaulted, and the bank takes control of the property. The owner must leave.

Many recent foreclosures are the result of defaults by subprime borrowers, people who have either poor credit ratings or not enough income to cover the monthly payments and the interest.

Owners can also end up losing their homes as a result of serious illness, divorce or a job loss.

Members of lending institutions encourage prospective buyers to make sure they are purchasing a home they can afford to make payments on.

Boykin suggested buyers meet with mortgage lenders before meeting with a realtor, so the lender can pre-approve them to purchase a home in their price range.

He said buyers should follow a "41-29 percent ratio." -- their total debt load should be no more than 41 percent of gross monthly income, and mortgage payments should be no more than 29 percent of gross income.

"We try to make sure we fit their budget to make sure they're comfortable in what they're getting," he said.

David Bradley, a spokesman for Charlotte-based Bank of America, which operates several branches in Kinston, urged buyers to "take a hard financial look before they sign on the dotted line."

He also encouraged buyers to meet with local nonprofit groups that offer mortgage counseling.

"If something sounds too good to be true, sometimes it is," said Bradley.

Bradley said banks do not automatically initiate foreclosure proceedings if payments are missed, but try to help owners make those payments.

"The foreclosure is the absolute last resort," he said. "We will go to every measure to try and work with that customer so they can keep their home."

David Anderson can be reached at (252) 559-1077, or danderson@freedomenc.com

Staff researcher Barbara Humphrey contributed to this story.