John Rebchook is a former Rocky Mountain News reporter with more than 30 years of experience in writing and communications... Denver-area foreclosure filings in the third quarter soared by 62.8 percent from the third quarter in 2008, shows data collected and analyzed today by InsideRealEstateNews.com.
In the seven-county area, there were 7,109 foreclosure filings in the third quarter, compared with 4,365 in the third quarter 2008. The biggest jump in each county – Adams, Arapahoe, Boulder, Broomfield, Denver, Douglas and Jefferson – occurred in August compared with August 2008.
However, the jump in foreclosures was expected to some extent, because of a new state law that went into effect in August 2008. The law, HB 1402, requires lenders to send out letter to delinquent borrowers 30 days before foreclosure filings. That led to August 2008 foreclosure filings to be abnormally low. Overall, August filings were up 165 percent from August 2008.
‘It would seem that for year-over-year comparisons, the implementation of HB 1402 last year is certainly the most important factor in making that comparison,” said Ryan McMaken, spokesman for the Colorado Division of Housing.
“The September numbers from 2008 are also exceptionally low, and this seems to be related to the drop in totals brought on by 1402 as well,” he added. ” Looking at the numbers from earlier in 2008, monthly totals were up around 400 to even 600. They only really climbed to that level again in April of this year, and numbers have remained solidly high this year. So while the drop in August and September of last year does show an extremely large increase year-over-year, the numbers for July, August, and September of this year appear to be near the highest rates we’ve seen in the last couple of years.”
McMaken also noted that in the Denver metro area last year, the increase from September to October was more than 50% from 1,623 to 2,520. And in both 2007 and 2008, the fourth quarter experienced larger filings totals than the third quarter.
” Both facts lead us to not expect the fourth quarter to register significant drops in totals as compared to the third quarter,” he said
However, there also were jumps in September filings from a year earlier, although not as great as in August from August.
“I don’t think we will see any big decrease of any kind from here on out to the end of the year,” McMaken said.
In the first nine months of the year, there were 20,260 filings, a 5.4 percent increase from the 19,226 filings in the first nine months of 2008.
“I’m not surprised with the 5 percent increase,” McMaken said.
He noted that foreclosures also were expected to rise because lenders had declared voluntary moratoriums on pursuing last fall, which ended in the spring. Many lenders used that time to beef-up their departments to work with homeowners delinquent on their mortgage payments, he said.
And that segues into the bright spot in the foreclosure numbers.
“Lenders appear much more willing to work with borrowers on things like loan modifications more than they did in the past,” said Carol Snyder, public trustee for Adams County.
In the third quarter of this year, 746 homes went to the public trustee auctions, a 32.9 drop from the 1,113 foreclosure sales in the third-quarter of 2008.
“To me, that indicates that lenders are working with borrowers to let them modify their loans or refinance,” she said.
“That is certainly what I am hearing and what foreclosure counselors are hearing,” McMaken said.
Some distressed borrowers, for example, are being offered 4 percent mortgages that are amortized over 40 years, allowing owners who were behind on their mortgages able to stay in their homes.
Tom Cryer, a broker with the Kentwood Co., last week said that lenders also may be reluctant to take possession of homes and put them on the market. He said that lenders may be hoping that the Obama administration will buy the homes or the delinquent loans from them at a better price than they they would flood the market with foreclosed homes.
“A lot of brokers walk around neighborhoods and we see vacant homes, which clearly are foreclosures,” Cryer said. “But these homes are not reflected in our numbers. If they were, the number of unsold homes on the market would be much higher.”
McMaken noted that the Treasury Department has bought up so many toxic loans that it has kept mortgage rates low, providing some relief to the housing market.
He said there are few signs that a a huge increase in demand is brewing that would allow the market to bail out the depressed housing market in the Denver area or across the nation.
And with unemployment growing and a wave of mortgage rates adjusting higher, many economists and observers expect another wave of foreclosures.
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County July 2008 July 2009 August 2008 August 2009 September 2008 September 2009
Adams 511 490 266 537 328 429
Arapahoe 454 590 167 554 348 555
Boulder 108 245 46 132 47 170
Broomfield 25 34 9 27 24 19
Denver 470 634 148 550 361 453
Douglas 176 222 111 284 53 234
Jefferson 352 390 151 301 210 359
Total 2,096 2,505 898 2,385 1,371 2,219
Percentage Change 19.5% 165% 61.8%
Contact John Rebchook at JRCHOOK@gmail.com or 303-945-6865
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