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Colorado foreclosures drop 14% from 2007

Change in law, restructured loans, moratorium cited

By John Rebchook, Rocky Mountain News (Contact)

Published December 5, 2008 at 12:05 a.m.

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Colorado foreclosure activity is poised to drop this year from 2007, according to a report released by the state, but that does not mean this marks the beginning of the end of the crisis.

There were 14 percent fewer completed foreclosures in the first nine months of this year compared to the same period in 2007, according to the report released on Thursday by the Colorado Department of Local Affairs' Division of Housing.

It is the first time that there has been a year-over-year drop in foreclosures since at least 2003, when the division began gathering statewide data.

There were 9 percent fewer completed foreclosures during the third quarter this year than during the third quarter of 2007. However, completed foreclosures jumped 66 percent from the second quarter to the third quarter.

At least three factors are leading to the drop in foreclosures, said Ryan McMaken, spokesman for the Colorado Division of Housing, and they do not include more people being able to sell their homes for a profit.

First, there have been changes in the state law that led to a drop in foreclosure filings during the spring, which may have affected the number of sales.

Also, more people are seeking help from counselors, and lenders are more willing to work with borrowers to restructure loans or accept short sales. In a short sale, lenders take less than the mortgage amount.

In addition, a number of large national banks have announced that they are voluntarily agreeing to a temporary moratorium on foreclosures, with hopes of working out deals to keep more homeowners in their houses.

And a number of national lenders have announced a temporary moratorium on foreclosures to give people time to find ways to save their homes.

Ron Woodcock, a broker with RE/MAX Southeast, said he knows two homeowners who have not made a mortgage payment in at least six months, and Bank of America/Countrywide, has not yet begun the foreclosure process.

"There are a combination of things going on, so I think it is too early to say that foreclosures will be lower in 2009 than in 2008," McMaken said.

The foreclosure crisis could drag on for another five years because there are so many option ARMs that will reset, said Billie Jo Downing, with RE/MAX Action Brokers in Loveland.

There were 6,454 completed foreclosures during the third quarter, bringing the total for the first three quarters of the year to 16,246. There were 19,025 completed foreclosures during the same period last year. There were 25,320 completed foreclosures during the full year of 2007 - a 40 percent increase over 2006. The division is predicting a 13 percent decrease for foreclosures in 2008 from 2007.

"2006 and 2007 saw big increases in foreclosure filings of 30 and 40 percent, so a 14 percent decrease so far this year makes us cautiously optimistic about the future," said Kathi Williams, Director of the Colorado Division of Housing.

While the report expects the statewide total for foreclosures to be down this year, the report shows some counties did experience more foreclosures when compared against last year.

In year-over-year comparisons between the third quarters of 2007 and 2008, Boulder, Broomfield, Douglas, El Paso, Jefferson, and Larimer Counties all reported increases.

Comments

  • December 5, 2008

    8:25 a.m.

    Suggest removal

    jacka writes:

    1 in 10 homes in the U.S. is 60 days or more behind on their mortgage.

    This is a blip before the crushing failures we'll see in 2009.

  • December 5, 2008

    1:44 p.m.

    Suggest removal

    Marshdale writes:

    Jacka: I hate to say it but I think you are correct. Wait until cities and counties start making a run on all of the Letters of Credit that they are holding that gaurantee developers will complete their public improvements. I work for a local jurisdiction, and I'm beginning to see the signs of it already, and Colorado is in better shape than many other states. I predict you will be hearing about this in the next six months. If it is as bad as I think, it could be collossal in terms of banking. I hope I am wrong.

  • December 6, 2008

    8:15 p.m.

    Suggest removal

    market_man writes:

    This is the end of banking as we know it.