Foreclosures are popping up across the nation, and have begun to sprout here on the Gulf Coast.

Most know when a homeowner is foreclosed on they lose their house, but what happens to their credit? What is happening to the local real estate market? Is it flooding with foreclosures? And if so, what will happen to the once strong market?

“The number one thing is (a foreclosure) affects a person’s credit score,” Marianne Wallace, assistant vice president of BankTrust in Gulf Shores, said. “Naturally they are going to have years forward where that’s the first thing seen on a credit report.”

A default of foreclosure on a credit score can eliminate a person’s ability to receive a loan in the future, therefore eliminating their opportunities to buy another house.

Wallace suggests working with your lender to make some sort of payments for what is owed to the bank. Even though it won’t lead to getting a house back the attempt to rectify the situation shows up on a credit score. Wallace advises documenting every agreement and payment toward the balance made.

But those being foreclosed on aren’t the only ones feeling the affect. Banks have become very tight on who they lend money to.

If a bank has to take a home, it costs them legal fees and the finances and worry of keeping the house up while the bank is trying to sell it. Banks are growing hesitant to loan like they were.

“Banks are beginning to lower their percentages,” Wallace said. “(They used to lend) 100 percent, then it was 90 percent and now the banks are looking at 80 percent. This makes it harder for qualified buyers.”

The local real estate market isn’t seeing a major crisis, but the Gulf Coast has begun to feel a bit of the foreclosure frenzy.

“Foreclosures are definitely an element of our market,” Kevin Corcoran, broker and owner of Re/Max of Gulf Shores, said. “Within the (multiple listing service) there are currently 71 condominiums listed as foreclosures.”

Seventy-one condominium foreclosures is a shy number compared to the 1,876 that are on the market. Of 775 houses being sold on Pleasure Island, 62 are foreclosures. Those figures show that only 5 percent of properties are foreclosures.

“This is a nationwide crisis we’re dealing with, which is what is unique to our market,” Corcoran said. “In the past we have been somewhat isolated; we’ve been ahead of the curve.”

He said while the Gulf Coast has become part of mainstream real estate, it isn’t seeing the vast problems bigger cities are experiencing.

“There were 2.3 million properties foreclosed on in 2008,” Corcoran said speaking on national numbers. “That’s 81 percent over 2007, and that’s a 225 percent over 2006.”

Comparing the numbers show the Gulf Coast is keeping its head above water, and Corcoran said foreclosure are having affects on the real estate market but aren’t causing drastic problems.

“There’s no doubt that they bring down the overall fair market value of real estate,” he said.

The fair market value is what a customer is willing to pay for a home.

Corcoran said the cheaper price of buying a foreclosure isn’t disrupting the sales of other houses because of the stigma of a one year right of redemption and the chance of a foreclosed home being in disrepair.

Corcoran said some homeowners can’t afford to keep up their home because they are trying to make house payments. Other owners cause damage before being foreclosed on.

“There are several buyers that don’t look at them identically,” he said.

Editors note: For the past three weeks The Islander has been focusing on foreclosures: what it means to foreclose, and what to consider when purchasing a foreclosure. Today’s final installation of the series highlights the affects foreclosure has on the real estate market and economy. Keep in mind that if you plan to purchase a foreclosure or have been foreclosed on, seek legal advice first.