Foreclosures in metro Denver decline 11.8 percent
Denver area saw first year-over-year drop in at least 12 years
By John Rebchook, Rocky Mountain News (Contact)
Published January 14, 2009 at 12:05 a.m.
Photo by Barry Gutierrez / The Rocky
Sheila Smith, a transaction manager for Your Short Sale Solutions, stands in front of a house at 9712 Independence St. in Broomfield that has been in a short-sale process. Lenders are working more with homeowners on options like short sales, she said.
At a time when the country is mired in the worst foreclosure crisis since the Great Depression, the Denver area is bucking the trend by seeing the first year- over-year decline in foreclosures in more than a dozen years.
There were 24,494 foreclosures filed with public trustee offices in the seven-county Denver area in 2008, an 11.8 percent drop from the record 27,785 filings in 2007.
Although 2008 was the second-worst year on record, it is a far cry from the 41.5 percent increase in foreclosures posted in 2007 from 2006.
Foreclosures had been rising each year since the mid-1990s, but when the economy was strong in the late 1990s, the increase was smaller than the housing and population growth.
"It is possible that Colorado has gone through the worst of its foreclosure cycle," said Rick Sharga of Irvine, Calif.-based RealtyTrac.
RealtyTrac will release its national foreclosure report Thursday, and the numbers will not be pretty.
"Nationally, we're seeing huge increases," Sharga said.
Mike Rinner of the Genesis Group, which tracks housing along the Front Range, said the Denver area, which suffered from rising foreclosures longer than the rest of the country, is coming out faster than most of the nation.
"I think it is a sign of times," Rinner said. "I think the market is ready to start on the upward track. But I think it is going to be a long slog."
Neither Sharga, Rinner nor anyone else is saying the foreclosure crisis in the Denver area is over.
"I think the decline in foreclosure filings is attributed to a few things, not any one thing," said Carol Snyder, public trustee for Adams County.
She pointed to lenders "putting a hiatus" on new foreclosures at least temporarily. Lenders are more willing to work with borrowers to avoid foreclosures through things such as short sales, where the lender accepts less than the loan amount. And more affluent homeowners now are running into problems making mortgage payments, while in the past it was primarily low-income people who had few alternatives other than foreclosure.
"I think the decrease in the number of filings has been somewhat of a blip to the extent that when the hiatus goes away, we could be dumped with a higher number of foreclosures again," Snyder said.
Sharga also pointed to the success of the nonprofit Colorado Foreclosure Hotline.
Spokesman Ryan McMaken said that at least 9,000 homeowners have avoided foreclosure because of the hotline during the past two years.
"If we simply added those people back in, we would have seen another record year," McMaken said.
"Our hotline data is showing that people are calling sooner than they used to," McMaken said. "They used to call when they were three months or more behind, while now a larger percentage are calling when they are still current on their payments."
Shannon Peer of Brothers Redevelopment, which runs the hotline, said that "obviously, there is no reason to send my counselors packing," because of the drop in foreclosure filings. "But any indication that we might see some start or signal in a retreat in (foreclosures) is good news."
Peer said that the number of calls to the hotline has more than doubled from a year ago.
Sheila Smith of Your Short Sale Solutions works with lenders and homeowners to keep people out of foreclosure.
"Lenders are working with homeowners more with options like short sales, interest rate modifications and even principal reductions," Smith said.
Denver County showed the biggest decrease in foreclosure filings last year, both in total numbers and as a percentage drop.
It had 6,145 filings in 2007, a 25 percent drop from the 8,240 in 2007.
Denver City Councilman Michael Hancock, who in 2007 launched a Foreclosure Task Force, said he thinks the drop in foreclosures may be because many people who had the riskiest mortgages have worked their way through the system.
"That is tremendous news, but we're not out of the woods yet," Hancock said. "Now my biggest concern is that people who have safe fixed-rate loans and good credit may lose their homes if they lose their jobs."
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January 14, 2009
5:14 a.m.
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windbourne writes:
Just wait. Many ppl will be out of work over this next year. As that happens, then we will see our forclosures jump. My bet is that this will happen by end of summer.
January 14, 2009
5:41 a.m.
DakotaPlainsman writes:
(This comment was removed by the site staff.)
January 14, 2009
6:18 a.m.
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RMThunder writes:
DakotaPlainsman - I couldn't agree with you more. It will get much worse stating 2nd qtr of this year. The US foreclosure projections for 2009 are 8 million – that is 22,000 a day – 7 days a week. The current running rate is at 11,000 a day nationwide. This entire housing crisis is a spawn from The Community Reinvestment Act. I've been in mortgage for 13yrs - and several of us saw this coming 4+ yrs ago. It was eniviatble.
January 14, 2009
6:58 a.m.
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Bmac writes:
The banks are "supposed" to be working with borrowers on modifications of their loans. However, this is just lip service. The "modifications" they propose are not helping the borrowers in any way, and in many cases just prolonging the inevitable. The banks are doing this to comply with the govt., but in reality they are just waiting for their bailouts. I believe there will be a lot more foreclosures in the next year or two.
January 14, 2009
8:22 a.m.
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jamesk writes:
Or it could just be that the sky isn't falling and the media is once again over-hyping a problem and making it sound much worse than it really is. Of course there are a lot of foreclosures, the media hype doesn't mean there aren't. But it's amazing that one good story about foreclosures declining is brushed aside as rubbish. Will be interesting to see how the media and newspapers, in particular, report on economic news after January 20. I'm sure it won't be quite the dire situation, miraculously.
January 14, 2009
8:32 a.m.
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leavemealone writes:
Colorado has turned the corner on foreclosures as of March 2008.
Colorado foreclosures started in 2001 so we're way ahead of the nation as a whole.
Our recovery has begun!
January 14, 2009
8:53 a.m.
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BikerChick writes:
..
BEWARE OF SNAKE-OIL SALESMEN
..
Pie-in-the-sky optimism from pink-painted folks who have a vested interest is to be considered with many grains of salt.
Most experts agree that we are in month-14 of a 42 month recession-depression. Dire emergency. Colorado is NOT saved-harmless. Soon we will see governments in bankruptcy.
The private home numbers are most impacted by emotional actions, the calendar (think Spring spurt) and government intervention. THE INFLATED 2006 MARKET PEAK ADJUSTMENT CONTINUES IN EARNEST TODAY.
Foreclosures in Nov and Dec were drastically reduced by government directed compassion. Guess what ? The latent actions are now flooding the bankers, who are working 24/7 - yes, in Colorado too.
Best advice; the slide will continue through 2012. 2006 prices will reappear in 2017. Buying and selling today is taking a huge and unnecessary risk.
There are twenty million felony-fraud mortgages out there, of which 400,000 are in Colorado. Old-school views are totally inappropriate just now. Until that mess is cleaned up, and certain folks are imprisoned (to set the proper example), recovery is a pipe-dream.
WE MUST NOT BAIL-OUT DUMB FOLKS ON BOTH SIDES OF THOSE CONTRACTS.
Extreme caution is advised. Beware of those who say otherwise.
..
January 14, 2009
9:06 a.m.
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underthebusinvestments writes:
Wow! The current data matches this trend perfectly:
http://www.thetruthaboutmortgage.com/...
Remember, that crystal ball you are looking at is really the hood ornament of the bus!
"I see treadmarks in your future..."
-The Bus Driver
January 14, 2009
9:10 a.m.
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RMThunder writes:
leavemealone - CO has not turned the corner on foreclosures - CO entered into the foreclosure market earlier than most states. AZ, CA, NV and FL all are in a similar boat as CO. However, with the neg ams, IO loans, etc. about to go adjustable within the next 16 months, none of these states, including CO, will be exempt from the volume of foreclosures.
January 14, 2009
9:13 a.m.
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RMThunder writes:
Bmac - you're right. These lenders are essentially kicking the can down the road...
January 14, 2009
9:14 a.m.
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c4l2a0 writes:
My guess is that the outflow of illegal aliens from Denver has increased by at least 10%.
January 14, 2009
9:37 a.m.
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chickenlittle1234 writes:
underthebusinvestments: Excellent link. Hard data is always the best, and you're right - hop out into the road right now and that bus will run you over.
And BikerChick, while I generally agree with your caution, most experts aren't calling for a 42 month recession/depression - in fact, most experts are still trying mightily to be even a little optimistic. Nonetheless, we're in for a couple of rough quarters at a minimum. The 3rd Q will be the test - we either start seeing recovery or we auger in even further - and if that's what happens, I'll agree with your more dire outlook.
January 14, 2009
9:39 a.m.
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leavemealone writes:
RMThunder writes:
"leavemealone - CO has not turned the corner on foreclosures"
Oh yes we have, however, that doesn't mean that foreclosures will just stop. Our volume will be way down compared to 2003, 2004, 2005, 2006, 2007.....etc.
January 14, 2009
10:01 a.m.
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chickenlittle1234 writes:
leavemealone - check out the link provided by underthebusinvestments. The national trend for resets and the local one is not that different. We're in the deflationary phase of an asset based recession, which means homeowners will still have to weather more significant downward pressure on values. I'll grant you this, though, that we may be at the peak level of foreclosures, but I can't agree that the volume will be below the 2003-2007 period you suggest. If history is any guide (specifically the S&L Era), they'll stay high for the next year or two, and then fall. It'll take 5-7 years before you see stable rates again.
January 14, 2009
10:11 a.m.
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jlgraybill writes:
Hey "leavemealone", what part of the article stating that "2008 was the second-worst year on record" didn't you understand? So what if 2008 wasn't as bad as the dreadful 2007? That does not mean that volume will be down compared to 2003-2006. In the current economy with the continual layoffs, the extremely tight lending, the re-sets occurring this year, and the number of small businesses which are struggling, how exactly are we turning the corner? Yes, Denver's better than most, but I still know lots of Denverites who are out of work, who are seeing lackluster sales with their small businesses, and who are cutting back spending. Foreclosure volume is going to suffer because of all of this. I hope it turns around by Q3, but it definitely hasn't turned around yet. 2009 may not see higher foreclosure volume than 2007 or even 2008, but the volume isn't going way down either (as you say). Remember your current comments, because in a year you will see just how wrong you are.
January 14, 2009
10:26 a.m.
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RMThunder writes:
Good article from a few weeks ago...
Delinquent mortgages seen rising sharply in 2009 & 2010
Credit bureau TransUnion forecasts the ratio of consumers with mortgages that are two months or more past due will hit 7.17% at the end of 2009, up from an expected 4.67% at the end of 2008, reports the Wall Street Journal. That would be the highest level in at least 16 years.
TransUnion LLC, which analyzed about 27 million consumer records, put the blame on adjustable-rate mortgages underwritten during the housing boom. It sees low teaser rates ending and borrowers unable to afford the higher rates.
However, some key interest rates have decreased in recent weeks, so that should limit the increase in mortgage rates by holders of adjustable mortgages — a point overlooked in the short Wall Street Journal write up.
A bigger issue might be the end of delayed amortization payments on folks who got interest-only loans or option ARM loans (those allow borrowers to defer principal and partial interest payments to the future).
TransUnion sees mortgage delinquencies peaking in the first quarter of 2010.
January 14, 2009
10:28 a.m.
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RMThunder writes:
underthebusinvestments - thanks for sharing that link - excellent!
January 14, 2009
10:40 a.m.
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underthebusinvestments writes:
No problem everybody!
Here is what's going to happen to Colorado in the coming months (years):
Dynamic Maps of Nonprime Mortgage Conditions in the United States
http://www.newyorkfed.org/mortgagemaps/
January 14, 2009
10:43 a.m.
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leavemealone writes:
We turned the corner in March 2008, however, I'll say again that doesn't mean we're in the clear. It will still be some time before a full recovery is in-place.
Our (Metro Denver) market has weathered the worst & now we can look forward to a steady rebound.
January 14, 2009
10:48 a.m.
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DakotaPlainsman writes:
Thomas Aquinas...."it doesn't take many wrong decisions to end up in a living hell".
January 14, 2009
10:57 a.m.
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DakotaPlainsman writes:
Many people buying houses did so with a flawed business model. Kinda like the RMN has been operating under. Betting on the future. And betting heavily without real analysis of what the future could hold. Being a property owner is a business. Not a right. It must be approached with a business-like appoach. Admittedly, many people with little going for them were tempted by an unethical (might have been illegal) marketing scheme. This scheme was blessed by the government. I hope the future will make owning a home more difficult.. scrutinize potential homeowns. It will take time to get the deadwood out of the system, but lets not throw any more logs on the fire.
January 17, 2009
10:25 p.m.
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RMThunder writes:
Has nothing to do with race or bigotry. Why would you even bring race into this??? A VAST majority of middle class individuals, of ALL races, borrower under the CRA (stated income / no income doc) – into properties they could afford otherwise – and if they could, they used their homes as ATM’s – which eventfully got them over-extended. When they defaulted, it caused a domino effect within the community. Get a grip.