John Rebchook is a former Rocky Mountain News reporter with more than 30 years of experience in writing and communications... Foreclosure filings in Colorado could hit or exceed 40,000 filings this year, officials said today, following a report that tracked more than 12,000 foreclosure filings in the second quarter.
“It is possible; it is not outlandish,” Ryan McMaken, who researched and wrote the second-quarter report for the Colorado Division of Housing. “The total for the mid-year is about 22,000. And if that trend continues, it would be the biggest year on record. It is even possible that it could approach 45,000.”
In his report, McMaken noted that foreclosure activity rose dramatically, as expected, from the first quarter to the second quarter, as major banks halted their moratoriums on pursuing foreclosures.
For the last two years, there have been about 39,000 foreclosures in the state.
“If went from a peak of let say 39,850 to 40,150, that is not that big of a deal in terms of numbers – it’s only a couple of hundred more,” said Ron Woodcock, of RE/MAX Southeast. But psychologically, it is very important if we hit that 40,000 number. It’s like buying a car for $29,999 instead of $30,000. It’s a big psychological issue.”
Woodcock said that he thinks that foreclosure filings – which in the second-quarter saw most of the increases outside of the Denver area- will remain flat this year. “I hope they don’t break 40,000. But I’m an eternal optimist,” Woodcock said. He also said that he thinks Colorado is in better shape than many other states, such as Nevada, California, Arizona and Florida.
Woodcock said he thinks the now-expired moratoriums were a “double-edged sword.” He said their most important function seemed to be allow banks to beef-up their loan mitigation departments more than help homeowners, who had been seeking loan-modifications. And he was critical of FHA-loan programs that were touted to allow tens of thousands of people to keep their homes. He said they helped almost no one.
Woodcock said he has a number of clients who were told by their banks not to make any more mortgage payments while they were in discussions with the bank. Now, they are receiving letters from the banks saying they have been turned down for the loan mods, because they don’t have enough income for them to justify taking the risk. And they are quickly setting dates for public auction sales.
Stephanie Riggi, manager of the Colorado Foreclosure Hotline, said they also are seeing a larger number of people who are having their foreclosure auction dates being set quicker than in the past. She said that it behooves lenders to keep the foreclosure process current, so they do not face delays in re-starting the entire process.
The solution to the foreclosure problem is so difficult, Woodcock said, because it may not be a good idea to modify loans for risky borrowers, who never should have gotten their loans in the first place. “What got us into this mess were lax standards,” Woodcock said. He said the solution is to get the homes in the hands of financially strong owners. “That’s what I think needs to happen,” he said.
One disturbing trend is that rising unemployment is causing more senior citizens to lose their homes, said Jodi Gelerter, director of the Pikes Peak Foreclosure Prevention Partnership.
She said one recent case involved a 65-year-old man who “had a great job,” and was suddenly laid off. His wife did not work. “They were close to paying off their home, and a couple of years ago, and they refinanced, pulling out some equity. Their home has dropped in value, so it is a double whammy.”
Gelerter said that in retrospect, they made a mistake in taking cash out of their home when refinancing, “but ultimately, the job loss was the bigger issue.”
McMaken of the housing division, said the third-quarter will most likely be the quarter that determines how bad the foreclosure problem is in Colorado. In the fourth quarter, the public trustee offices do not hold auctions during the Thanksgiving and Christmas weeks, so foreclosure activity always drops for seasonal reasons, he said.
