Colorado Mortgage Problems Increase Across Front Range
Colorado mortgage foreclosures continued to batter the Front Range housing market in the first quarter, dashing hopes that stronger job growth would hold back rising delinquencies, according to the Denver Post.
Public trustees in 51 of the state’s 64 counties reported starting 9,254 foreclosures in the first quarter. If that pace continues, Colorado will record more than 37,000 foreclosures this year, about 30 percent over the 28,453 recorded in 2006, which was 31 percent higher than 2005.
“I thought I would see some moderation and flattening,” said Ryan McMaken, a Housing Division spokesman who compiled the report.
“(But) we will exceed last year’s numbers.”
Colorado’s unemployment rate fell to a seasonally adjusted rate of 3.6 percent in March, down from 4.4 percent in March 2006.
Foreclosures are concentrated along the northern Front Range, with Adams, Weld, Arapahoe, Denver and Pueblo counties the hardest-hit areas.
In Adams County, 1 of every 98 households entered foreclosure on their Colorado home loans during the first quarter, while in Weld County, the rate was 1 in 124.
In some counties, such as Douglas, foreclosures trended lower. They also remain benign across much of the western half of the state, where home values continue to show respectable gains.
Foreclosures could decline in the second quarter as rising home sales give more people a chance to unload their properties. Foreclosures would then gain steam again in the third and fourth quarters, McMaken predicted.
The Denver Post examined the root causes of Colorado’s foreclosure epidemic in a 10-part series last year called “Foreclosing on the American Dream.”
Government officials and non-profit organizations have been focusing on early mortgage problem intervention, trying to reduce the percentage of foreclosed homes that end up going back to lenders.
Those efforts appear to be bearing some fruit, even as total foreclosures rise. In 2006, about half of all foreclosures resulted in the mortgage company actually taking possession.
In the first quarter, that portion fell to 37 percent.
Increasingly, homeowners in foreclosure seek scape via a “short sale” wherein the mortgage lender agrees to accept a home sale and payoff for less than the balance owed on the mortgage.
Distressed sales - either lender-owned foreclosures or short sales - have come to represent more than half of all transactions in many parts of the metro Denver market, said Tom Steele, an Aurora real estate agent.
Negotiating a short sale with a Colorado mortgage provider remains an uphill battle, he said, and too many troubled borrowers fall victim to fraudulent schemes disguised as promises of help.
“I haven’t seen the flexibility yet. Banks are tough to work with,” Steele said.
A larger number of calls to the hotline are from borrowers with adjustable-rate, interest-only and payment-option mortgage loans, said Zachary Urban, director of housing counseling with Brothers Redevelopment and the hotline’s supervisor.
Unable to handle escalating mortgage payments and declining values, more borrowers are losing their homes with jobs, health and marriages intact.
“They have done nothing in their own situation to cause the foreclosure except to get that loan in the first place,” Urban said. “How do you rework the loan when there is no collateral to back up that home loan?”
Not all public trustees responded to the quarterly survey, the second undertaken by the Housing Division. Most of the 13 counties that didn’t respond have small populations and minimal foreclosures.
The scary thing? Colorado would have probably recorded more foreclosures in the first quarter if the state’s mortgage companies weren’t so backed up and overwhelmed, Urban said.
“They aren’t foreclosing on people, because they don’t have the resources,” he said.
SOURCE: Denver Post