RealtyTrac's data questioned

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Colorado is back on the Top 10 list it doesn’t want to be on.

The state was ranked 10th for its foreclosure rate in November by RealtyTrac. The Irvine, Calif.-based company said that one out every 433 households in Colorado was in some part of the foreclosure process last month. Nationally, one out of every 492 housing units is in some state of foreclosure, from the initial notice to the REO (real estate owned), when the bank buys it at a foreclosure auction.

However, Mike Rosser, former chairman of the Colorado Foreclosure Task Force, said RealtyTrac’s methodology is inherently flawed.

“The trouble at looking at foreclosures per household is that each foreclosure can include first mortgages, second mortgages and homeowner association liens,” Rosser said. “Looking at foreclosures on a per household basis doesn’t mean anything. It truly is meaningless.”

In total, RealtyTrac found 4,970 foreclosure filings in Colorado – 1,549 of them were REOs and 3,409 of them were what it calls Notice of Trustee Sales. RealtyTrac also had 13 what it calls Notice of Defaults. The number of foreclosure filings in Colorado were down 4.5 percent from November 2009, far below the 14.4 percent drop nationally. Foreclosures also were down 13.6 percent in Colorado from October, while nationally, foreclosures were down 21 percent in November from October.

MBA different take on Colorado

Ryan McMaken, spokesman for the Colorado Division of Housing, who does his own analysis of Colorado and Denver-area foreclosures, notes that RealtyTrac’s numbers diverges from data from the Mortgage Bankers Association.

“The MBA data continues to show that Colorado’s foreclosure rate is falling farther and farther behind the national rate,” McMaken said. “I would guess that at least some of this discrepancy is explained by the fact that Realtytrac doesn’t account for the differences in foreclosure among the many states while the MBA method bypasses those differences.”

However, there is no doubt that Colorado’s situation is better than that of states that have been hammered much harder by the foreclosure crisis, he said.

“Accepting the Realtytrac data as is, it seems that the first thing to note is that Colorado isn’t really in the same league with the big foreclosure states like California and Arizona when it comes to foreclosure rates,” McMaken said. “Although Colorado is supposedly in the top 10, the rate in Colorado is 433 households per foreclosure event, which includes both filings and sales. This is a considerably lower foreclosure rate than all the other states in the top 10 with the exception of Illinois, which has a rate of 408. Note that states one through seven all have rates of about 300 households or fewer per foreclosure event. Nevada is 99 and California is 233.”

National drop

Nationally, foreclosure activity showed a steep decline in November.

“Foreclosure activity decreased dramatically in November, with fewer than 300,000 properties receiving a foreclosure notice for the first time since February 2009,” said James J. Saccacio, chief executive officer at RealtyTrac. “While part of the decrease can be attributed to a seasonal drop of 7 to 10 percent that typically occurs in November, fallout from the foreclosure robo-signing controversy forced lenders and servicers to hit the pause button on many foreclosures while they scrambled to revamp their internal procedures and revise or resubmit questionable paperwork.”

Both the 21 percent month-over-month decrease and 14 percent year-over-year decrease in foreclosure activity were the highest drops recorded since RealtyTrac began publishing the U.S. Foreclosure Report in January 2005.