Foreclosure filings in the dozen largest Colorado counties rose in February from February 2009, as I reported this morning on an earlier blog.
But the 6.5 percent increase was not a surprise, considering a year ago foreclosure filings were artificially low, because several large banks had temporary moratoriums on foreclosure activity in early 2009, notes Ryan McMaken, of the Colorado Division of Housing, which released today’s report.
And the foreclosure sales are up even more, but that is largely a function of homes that have begun the process with filings. McMaken’s research indicates there tends to be a spike in sales, eight months following the actual filings.
But the bigger question is, despite the 6.5 percent blip in filings, does it appear that the worst of the foreclosure crisis is behind us?
“I’ll take the Fifth on that one,” Ron Woodcock, a broker with RE/MAX Southeast, answered, when I posed that question to him.
Colorado “awesome” compared to rest of country
Seriously, he said that although Colorado and the Denver area are in much better shape than most of the rest of the country, the biggest threat to a resurgence in foreclosure activity are people losing their jobs, he said.
“I think Colorado is in awesome shape compared to the rest of the country,” Woodcock said. “You know I was a licensed broker in Florida for 20 years before I came to Denver. If I were still in Florida, I’d be waiting tables at Disneyworld, and not selling homes.”
But he said that what initially drove the foreclosure crisis – bad loans given to anyone who could fog a mirror – no longer are the chief culprit driving foreclosures.
Lack of jobs the problem
“I would only say that one of 10 people I deal with, is because they have adjusting ARMs, or something,” Woodcock said. “Nine out of 10 times it is because they have lost their jobs. This country has to create more jobs! So it is very hard to say if we are at the bottom of foreclosures. Without job creation, it is hard to know if we have seen the worst of it. I think I am more optimistic than most people, but I am worried that we might see another spike in foreclosures, if people can’t get good jobs.”
Shannon Peer, who heads counseling at Brothers Redevelopment in Edgewater, which runs the Colorado Foreclosure Hotline, 1-877-601-HOPE, said that 85 percent of the people who have been calling mention that they are worried about losing their homes either because they lost their jobs or their income has dropped sharply.
Lenders offering forbearance programs
The good news, said Stephanie Riggi, also of Brothers, is that lenders increasingly are more willing to work with people to keep them in their homes. If they lose their jobs, they may not qualify for loan modification programs, but some lenders now are allowing forbearance programs, in which the lender will allow the homeowner not to pay their mortgage for a certain period of time, while they try to get back on their feet.
“It’s really a temporary suspension of the mortgage payment,” she said. “Every lender is different. But they might suspend your payments for three months, and at the end of that period re-evaluate to see where you are.”
When compared to other parts of the country with large urban areas, Denver is certainly in better shape than most places, said McMaken, of the housing division.
Areas that previously were “ground zero” for foreclosures – Adams, Arapahoe and Denver counties – have seen huge drops in activity, he noted.
“But now, it is spreading to other parts of the state,” McMaken said. “We’re seeing huge increases like Mesa County. And the mountain resort communities are really being hit hard. Public trustees are telling me that in the past, almost none of the resort properties that went into foreclosure went all the way to sales. That’s because there were a lot of people eager to buy them. People used to even fly in from Russia to buy properties. You don’t hear of that anymore. Even in places like Telluride, properties will sit around unsold for months.”
But overall, McMaken said at least for the short-term, foreclosure filings and foreclosure sales will start to level off. But he said that Colorado is not immune to what happens to the national economy. If inflation rises, which causes mortgage rates to increase, “that will not be good news for Colorado housing,” he said. Also, he said that when thousands of students graduate from high school and college in May and June, the size of the labor force will grow. And without more jobs on the horizon, the unemployment rate may grow, he said.
Contact John Rebchook at JRCHOOK@gmail.com or 303-945-6865
