Washington County Sheriff W. Samuel Hill has been busy this past year serving court papers on residents facing foreclosure.

Washington County had a surge in foreclosure filings in Vermont in 2007, according to a Free Press analysis of state data.

"It's mostly financial. People aren't able to pay their bills," Hill said. "We are seeing the financial strain that people are having."

Vermont logged 1,209 foreclosure filings in 2007, several hundred more than in 2006 -- or approximately a 26 percent increase; the tally is incomplete because Franklin County did not report foreclosures for 2006.

Although foreclosures are increasing in Vermont, the state remains in a much better position than most.

"While the increase in Vermont foreclosures may seem dramatic to some -- compared to what's going on nationally -- the increase is quite modest," said Andrew Leventis, senior economist at the Office of Federal Housing Enterprise Oversight, an independent entity within the Department of Housing and Urban Development.

Nationally, foreclosure filings increased 75 percent from 2006 to 2007, said Tom Candon, deputy commissioner of the Vermont Department of Banking, Insurance, Securities and Health Care Administration.

Florida, Michigan and Nevada have the highest foreclosure rates, a recent report said. Vermont ranked No. 49 for percentage of households in foreclosure; South Dakota registered the lowest foreclosure activity.

In all, about 1.8 percent of Vermont's roughly 68,000 mortgages are in foreclosure.

"We don't like to see that number increase at all. We hope it goes down. But, at this point, we're much better off than many states in the country," Candon said.

County specific

Vermont's largest percentage increase in foreclosures filings occurred in Orange County, which recorded a 60 percent increase to 64 filings. Substantial increases were also recorded in Washington County, which saw a 45 percent increase to 113 filings; Windsor and Rutland counties both experienced a 43 percent rise in foreclosure filings to 157 and 163, respectively.

Candon said his department examined specific foreclosures in several counties -- including Rutland, Windham and Windsor -- to determine what is driving the foreclosures.

About half of the mortgages in foreclosure, he said, were adjustable rate mortgages issued within the last few years, he said. Adjustable rate mortgages, or ARMs, begin at lower introductory interest rates and then reset at higher levels, creating larger monthly payments that can strain household budgets.

Most of the mortgages in foreclosure were for about $100,000 -- "much lower" than Candon expected.

"We want to keep track of that to see if there continues to be a trend there," Candon said of the higher foreclosure rates in certain counties.

Chittenden, Rutland and Windsor counties had the highest number of actual foreclosure filings, the banking department's data said; Chittenden County rose 13 percent to 179 filings. U.S. Census estimates for 2007 put Chittenden and Rutland as the two most populous counties with Windsor in fourth place.

Windham, where filings fell 2 percent, is the only county that recorded a decrease.

From the time a filing is made, the foreclosure process can take up to a year, Candon said.

Foreclosure causes

Foreclosures typically occur because buyers purchased a home they could not afford, a decision sometimes encouraged by aggressive mortgage brokers, said Jeff Carr, president of Economic & Policy Resources Inc. in Williston.

Economic factors, such as losing a job, also lead homeowners to fall behind on the mortgagepayments, he said. Candon added illness and divorce to the list of factors that contribute to foreclosure.

People also have rearranged the order for repaying debt, Carr said.

Historically, people paid made their mortgage payments first, followed by credit cards and car payments.

But that has changed, the economist said.

Now, people are paying car payments, credit card bills, and then housing payments -- if they have the money.

"In many cases, if they can't make the payment they go down to the bank and give them the keys" to the house, Carr said. "There has been a change in priorities."

Although Vermont's foreclosure tally is low, compared to other states, each of the roughly 1,200 foreclosures in Vermont last year are "tragedies of various degrees," Carr said.

"It's something that reflects the times," he said.

Contact Dan McLean at 651-4877 or dmclean@bfp.burlingtonfreepress.com