Earlier today I blogged about a state report that shows foreclosure filings in Colorado in 2009 set a record, but foreclosure sales declined from 2008 and 2007 levels.
Later, experts said that without the Colorado Foreclosure Hotline, 1-877-601-HOPE, which has received more than 60,000 phone calls, has played a big role in stemming the tide of people losing their homes.
“We’re making good progress,” said Ryan McMaken, who released the report that showed a record 46,394 foreclosure filings last year, an 18 percent increase from 2008, but only 20,437 foreclosure sales – a 4 percent drop from 2008.
“I think we are doing very well, especially in light of the 2009 foreclosure filings setting a record, but we still had fewer foreclosures being completed,” McMaken said.
Last year, a new state law required people who were facing to receive information about the foreclosure hotline. McMaken noted that there were about 19,000 foreclosure filings in the five-month period when the law was in effect last year, and the hotline received about 18,000 calls during that period.
He noted that some people would have called more than once and not everyone who called the hotline during that time period was just beginning the process. Still, it indicates that people are taking advantage of the free hotline, which is staffed by HUD-approved counselors.
“We know that 16,000 people who called the hotline have reached a resolution,” McMaken said. “If you added another 16,000 people to foreclosure sales, it would had a huge increase.”
Shannon Peer, who heads counseling for the non-profit Brothers Redevelopment, which manages the hotline, said without a doubt it is the single factor that made the biggest dent in the outcome of foreclosure, although he cautioned the state is still dealing with a “foreclosure crisis.”
And it typically takes a great deal of patience and persistence on the part of the homeowners, whether they are trying to get a permanent loan modification, a short sale, or something else.
“This is something that can take many months to resolve,” Peer said. “It is not something that is going to change in a month. It’s a long process. In some ways, it is hard even to compare one six month period to another, because it can take so many months to work its way through the system.”
Statewide, the former hotbeds of foreclosure sales – Denver and Adams County – have shown dramatic drops in foreclosure sales by public trustee offices, noted McMaken.
The growth is primarily occurring in “mid-sized” markets on the Western Slope and eastern plains, which is the past weren’t the victims of rising foreclosures, he said. In some cases, such as around Grand Junction, the problem is because of a job cuts in the formerly growing and lucrative oil and gas industries, he said. In other places, such as Teller and Park counties, people owned homes based on the “drive to buy” principle, can no longer have the income to pay their mortgages, because they either lost their jobs or are grossly under-employed.
In addition, resort communities in places such as Eagle and Summit counties, are reporting rising foreclosures. McMaken said that figures indicate that many of those are second homes and maybe a third of them are some form of timeshare units.
Ron Woodcock, a broker with RE/MAX Southeast, said the overall Denver single-family housing market is the strongest he has seen since moving here from Florida 3-1/2 years ago. He said some counties in Florida had 30,000 foreclosure filings last year.
“We’re really bucking the national trend,” Woodcock said. “We’re nothing like California, Florida, Nevada or Arizona.”
Woodcock, however, disagrees with some people who say that if mortgage loans were once again assumable, that would help the foreclosure crisis. “Currently, mortgage rates are lower now than they were two or three years ago,” he said. “Why would you assume a loan of 5.5 percent, when you can get a 4 percent loan today? It might help going forward, but it is not going to help today. And while it is harder to qualify for a loan, really what has happened is that we have returned to what it used to take to qualify for a loan.”
McMaken, of the housing division, said the first wave of foreclosures was due to bad ARMs, interest-only loans, and subprime mortgages. Rising unemployment and falling incomes are responsible for most of today’s foreclosures, he said.
Woodcock said some lenders now would rather work with borrowers on loan modifications, rather than short sales, in which the bank accepts less than the mortgage amount. Still there have only been 1,072 permanent loan modifications in Colorado through 2009. (For more on loan modifications, please go to this blog.)
But Woodcock said that he does worry about the so-called “shadow market.” The shadow market is an unknown number of homes held by the banks, which are not actively being marketed. Nationally, the banks may be holding as many as 7 million properties in this fashion, Woodock said.
“An influx of a lot of those homes would have a negative effect on the market,” Woodcock said. “On the other hand, a lot of investors groups are raising money to buy big portfolios from lenders. They’ll step in and buy 50, 60 or 100 homes at one time. Those type of deals aren’t reported in the MLS, but that type of activity is going on.”
Contact John Rebchook at JRCHOOK@gmail.com or 303-945-6865.