Foreclosures set record

By John Rebchook, Rocky Mountain News (Contact)

Published December 12, 2007 at 12:10 p.m.
Updated December 12, 2007 at 12:10 p.m.

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Foreclosure filings in the first nine months of this year already have outpaced the record number in 2006, shows a report released today.

There were 28,960 foreclosure fiings in the first three quarters of the year, compared with 28,960 in all of 2006, according to the report released by the Colorado Division of Housing.

There also were 19,025 foreclosure sales at auction, compared with 15,112 foreclosure sales reported during 2006.

Foreclosure filings have been largely flat from quarter to quarter during the year, with high-foreclosure counties such as Adams, Denver, and Arapahoe reporting roughly the same number of new foreclosure filings during the third quarter as during the first and second quarters.

Only Weld County reported a substantial increase in foreclosure filings, with a 15 percent rise from 650 during second quarter to 746 during the third quarter.

According to the Foreclosure Prevention Task Force, the numbers would be higher without the Foreclosure Hotline.

"Our records indicate that at least 5,600 households that have sought counseling through the hotline over the last year have avoided foreclosure," Kathi Williams, director of the Colorado Division of Housing and co-chair of the Task Force, said in a statement.

"The greatest impact of that is likely seen in the number of foreclosure sales," she added. "So without the hotline, we might be looking at 24,500 foreclosure sales instead of 19,000."

Not all foreclosures that enter the system end up as foreclosures sold at auction.

A large number of them will be "short sales," in which the lender accepts less than the mortgage amount as payments.

However, most of the increase in foreclosure activity this year has been in foreclosure sales at auction, which is when a foreclosed home is sold back to the lender or to a third party.

Overall, from January through September of this year, foreclosure sales increased 26 percent over 2006. Among individual counties, Adams County reported sustained growth in foreclosure sales, climbing 6 percent from 1,180 during the second quarter to 1,255 during the third.

Sales increased 8 percent in El Paso County, rising from 497 to 537 during the same period. Weld County reported a 19 percent increase from 456 during the second quarter to 542 during the third.

According to housing counselors, a difficult housing market makes foreclosure sales at auction more likely as time goes on since it becomes more difficult for borrowers to sell a home at an amount close to what is still owed on the mortgage.

"Clearly, our biggest concern is the rise in foreclosure sales at auction," Zachary Urban, administrator of the Foreclosure Hotline and a housing counselor with Brothers Redevelopment in Edgewater, said in a statement.

"The fact that those numbers continue to grow shows that there are now fewer options for borrowers to sell their homes before the final foreclosure sale."

Foreclosure filings in Colorado increased 31 percent from 2005 to 2006 and 110 percent from 2003 to 2006. Forecasts indicate that, barring major positive changes in the housing market, foreclosure filings in Colorado will increase to 37,000, a 30 percent increase, over 2006.

The most significant foreclosure activity is on the Front Range.

For example, the counties with the most foreclosure filings per household were Adams, Weld, Arapahoe, Denver, and Pueblo. Adams and Pueblo counties topped the list with one filing per 32 households and one filing per 40 households respectively. In Weld County, there was one filing per 41 households, with Denver and Arapahoe Counties reporting one filing per 43 households and one per 47 households respectively.

In the mountains and on the Western Slope, foreclosure rates are generally much lower, with Mesa County and Summit County reporting a filings rate of one per 187 households and one per 112, respectively. La Plata County reported a rate of one filing per 281 households.

Statewide, there was about one foreclosure filing per 64 households for the period from January 1- September 30.

In the central mountains and on the Western Slope, the active housing market makes it relatively easy to sell a home if the borrower is unable to keep up with payments.

On the Front Range and on the Eastern Plains, due partly to a large supply of for-sale housing, it is more difficult to sell a home quickly, and this may lead to larger rates of default.

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