Foreclosures drop 10%

Foreclosure filings in Colorado’s 12 largest counties fell 10.1 percent in August from August 2009, shows a report released today by the Department of Local Affairs’ Division of Housing. However, on a month-to-month basis, filings were up for the second month in a row in August.

There were 3,142 new foreclosure filings in August compared with 3,496 filings  in August 2009. Monthly foreclosure filings totals have been down year-over-year each month since April. Foreclosure sales at auction, however, increased from August of last year to the same time this year. Foreclosure sales at auction rose 29.7 percent, rising from 1,359 during August of last year to 1,763 during August of this year. From July to August this year, foreclosure filings rose 15.6 percent, and foreclosure sales at auction fell rose 11.5 percent.

Lenders quicker to foreclose

“Call volume has traditionally gone up in August in recent years, but we are starting to see more foreclosures advancing through the process than was the case last year,” said Stephanie Riggi, manager of the Colorado Foreclosure Hotline call center. “For a while, mortgage servicers were regularly taking 12 to 18 months to process foreclosures, but now it looks like we’re seeing a return to a more normal six to nine month period for foreclosures to go through the process.”

Foreclosure filings are the initial filing that begins the foreclosure process, and foreclosure sales totals are the total number of foreclosures that have been sold at auction at the end of the foreclosure process.

Zach Urban, of the Adams County Housing Authority, said that loan servicers – those who collect the monthly mortgage payments – increasingly are under pressure from the investors of the loan to go through with the foreclosure.

Postponing foreclosure sales hard

“The words “foreclosure” and “postponed” will no longer be used in the same sentence,” Urban said. He said investors unwilling to work with distressed borrowers “will hurt everybody.” He said investors are making decisions on loans from a “10,000-foot” vantage point on home loans that require “surgical precision.”

Ron Woodcock, a broker with RE/MAX Southeast, said he is increasingly finding that the investors will not postpone foreclosure sales, even if there is a short-sale in the works. “What are we doing? This is only going to hurt property values.”

Short sales frustrating

Billie Jo Downing, a broker with RE/MAX Action Brokers in Loveland, said she is experiencing the same thing, which she is certain is a nation-wide trend. “It is extremely detrimental to the whole process,” Downing said. “If you have a contract for a short-sale set to close on Friday, and the public trustee sale is scheduled for Wednesday, they let the sale be held.” She said servicers are so swamped that if you miss a call, ‘too bad, so sad,” as you won’t get a second chance to talk with them to try to work something out. She said the various guidelines to try to speed the short-sale process that have been implemented in April and August, “have no teeth.” And she said she is not sure it is wise to have the government can dictate to lenders, in any case, which means there is no easy solution when lenders don’t follow voluntary guidelines.

“It is all very frustrating,” Downing said. “I don’t want to think short sales are not valid options, because for a lot of people they are. But it is a frustrating process and it is very tough to navigate.”

Ryan McMaken, spokesman for the Colorado Division of Housing,  said that foreclosure filings ticked up from July, but he doesn’t have enough data to know if there is a seasonal impact.

“We saw numbers increase from July to August, but compared to last summer’s number, we’re seeing totals drop off a bit, McMaken said.  “But the larger trend doesn’t seem to have changed much. We hit a plateau with foreclosures back in 2008, and we haven’t seen a sustained drop or a sustained rise in foreclosure activity since.”

Shannon Peer, director of Housing Counseling at Brothers Redevelopment, which manages the Colorado Foreclosure Hotline, 877-601-HOPE, said that there has been no let up in calls from distressed homeowners. “Within the last several months, we have seem some shifting, but no slowdown, from people who are coming in who are in the later process, which puts a certain amount of urgency into their situations.” He said some people are calling to close to the public trustee sales date to give them a full range of options that would have been available if they had called earlier.

Activity varied by county

Foreclosure activity varied by county. The counties with the largest decreases in foreclosure filings from August 2009 to August 2010 were Adams County and Denver County, where filings decreased by 24.2 percent and 20.0 percent, respectively. Pueblo County reported the largest rise in new filings with an increase of 31.6 percent, year-over-year.

Year-over-year, all counties showed increases in foreclosure sales at auction. From August 2009 to August 2010, foreclosure sales increased 196 percent in Mesa County. Arapahoe County and Weld County reported the smallest increases among all counties surveyed with increases of 5.3 percent and 15.4 percent, respectively.

The county with the highest rate of foreclosure sales was Adams County with a rate of 616 households per foreclosure sale. Weld County came in second with 634 households per foreclosure sale. The lowest rate was found in Boulder County where there were 2,029 households per foreclosure sale. The largest increase in foreclosure rates since 2009 was found in Mesa County where the foreclosure rate increased from 2,133 households per foreclosure to 720 households per foreclosure, year-over-year.

Peer, of Brothers Redevelopment, said that he does not see any big improvement in Colorado’s foreclosure picture in the near-term. “There doesn’t seem to be any feeling we’re going to see a big reduction in filings or sales in the coming months,” he said.

The Division of Housing’s monthly foreclosure report surveys foreclosure activity in the 12 largest counties of Colorado. The report is a supplement to the division’s quarterly foreclosure report that includes all counties in Colorado.

Contact John Rebchook at JRCHOOK@gmail.com

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