State ranked 7th in foreclosures

RealtyTrac report overstates figure, local experts say

By John Rebchook, Rocky Mountain News (Contact)

Published June 13, 2008 at 10:35 p.m.

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Colorado ranked No. 7 in the nation for its foreclosure rate in May, according to a national report released Friday by California-based RealtyTrac.

However, local experts continue to criticize RealtyTrac's figures, saying they overstate the number of foreclosures in Colorado, making the situation appear worse than it is.

Nationwide, foreclosure filings are up almost 50 percent from a year earlier, according to RealtyTrac, based in Irvine, Calif.

Across the country, 261,255 homes received at least one foreclosure-related filing in May, up 48 percent from 176,137 in May 2007 and up 7 percent from April.

One in every 483 U.S. households received a foreclosure filing in May, the highest number since RealtyTrac started the report in 2005.

It was the second-straight monthly record.

Nevada, California, Arizona, Florida, Michigan, Georgia and Massachusetts had the highest statewide foreclosure rates.

Metropolitan areas in California and Florida accounted for nine of the top 10 areas with the highest rate of foreclosure. Stockton, Calif., was No. 1.

Local experts say Colorado is the only state in the country that uses a public trustee system rather than a judicial process.

"RealtyTrac has, once again, demonstrated that Colorado counts foreclosures differently than other states," said Chris Holbert, the president of the Colorado Mortgage Lenders Association.

In Colorado, if a homeowner has a first and second mortgage on a home and stops paying both mortgages, the public trustee would count that as two foreclosures, even though it involves one owner and one house.

"The judicial process in most other states would generally count it as one.

"Colorado would count it as two," Holbert said.

"If we look to first mortgage loans that are seriously delinquent or in foreclosure, Colorado ranks 25th in the nation, which is an accurate comparison among all 50 states," Holbert said, alluding to a recent Mortgage Bankers Association report.

RealtyTrac officials have consistently defended their numbers as being accurate. And even critics say their numbers are helpful in determining the trend of foreclosure activity, which is at record levels in the Denver area and Colorado.

A Credit Suisse report from this spring predicted that 6.5 million loans will fall into foreclosure over the next five years, reaching more than 8 percent of all U.S. homes.

The latest grim foreclosure news comes as criticism mounts that efforts by government and the mortgage industry to stem the tide of foreclosures aren't keeping up with the rising number of troubled homeowners. Critics say a Bush administration-backed mortgage industry coalition, dubbed Hope Now, is falling far short.

"It's clear that these voluntary efforts in and of themselves cannot really make a dent," said Allen Fishbein, director of credit and housing policy at the Consumer Federation of America. "Government intervention is going to be necessary."

rebchookj@RockyMountainNews.com or 303-954-5207 The Associated Press contributed to this report.

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