The number of home foreclosures in Montana is expected to rise this year, but the rates still remain lower than the rest of the country, real estate agents and lenders were told. Speaking at a seminar on foreclosures and their impact on Montana families, Sue Woodrow, community affairs manager for the Helena Branch of the Federal Reserve Bank of Minneapolis, said Tuesday that there are some hotspots of foreclosure activity in Montana, but that the situation here is not as bad as in parts of the Southwest, Midwest and Florida. "We're pretty low compared to the rest of the country," Woodrow said. "We're seeing them in western locations and in some of the cities." Woodrow said the number of foreclosures nationally has increased markedly since 2006, mostly due to the use of negative amortization loans, interest- only loans, second liens and low-document loans. "There's a strong correlation between real appreciation and the use of alternative mortgage products and how that has impacted where we're seeing foreclosure problems," she said. Sheila Rice of the Montana Homeownership Network and NeighborWorks in Great Falls said six bank-owned homes have been foreclosed on in the Helena area, compared to 60 in Great Falls. She said her organization typically counts around 800 foreclosures a year in Montana, but anticipates 1,200 this year. She said that in addition to creative financing, many borrowers increased their credit card use and home equity lines of credit, which further stressed family budgets. "There was a feeding frenzy there for a long time, where people felt like if I didn't do this now, I will never be a homeowner," she said. "And in fairness to the buyers, in 40 to 50 percent of the subprime loans, they could have gotten a prime loan and were up-sold." The seminar, sponsored by the Montana Financial Education Coalition, drew about 50 real estate professionals and lenders eager to learn about market conditions. Buck Rea of Green & Green Realty said he's not seeing borrowers getting in trouble in Helena, "but I'm here for more information. People are asking more questions, wanting more information." Woodrow said that one in five loans made in Montana in 2006 was a high-cost loan, a category that includes adjustable rate mortgages. "So the thing we'll be watching out for is what happens when those start to reset," she said. The interest rates on those resets may not be as high, because the Federal Reserve has been dropping the federal funds rate, she said. Many borrowers take advantage of low introductory interest rates to buy a home, then find themselves in trouble when the monthly payment increases as the interest rate goes up. (AP) Information from: Independent Record, http:// www.helenair.com.