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Mortgage delinquencies drop

Highlights:

  • 90-day mortgage delinquencies at 6-year low.
  • 30-day delinquencies at 9-year low.
  • Bankruptcies, foreclosures also down.
Source: Colorado Division of Housing.

Source: Colorado Division of Housing.

During Denver’s foreclosure crisis, hundreds of people would be burning up the phone lines at Channel 7’s mortgage help hotline. Jim Spray would field questions from as many callers as he could squeeze in during the 90-minute sessions that he believes ran from 2007 to 2010.

“Now, I might average three calls a month,” said Spray, an independent mortgage broker and consumer credit expert.

That’s not surprising, as mortgage delinquencies, once a raging epidemic in the Denver area has basically been cured by a strong economy and rising housing market.

In fact, Colorado is benefitting from a trifecta of good news, as the state has seen big drop in mortgage delinquency rates, foreclosure and bankruptcies.

The 90-day delinquency rate, known as “serious” mortgage delinquencies, was a mere 1.3 percent in the first quarter, the lower level since 2008, according to Ryan McMaken, economist for the Colorado Division of Housing. That was almost half the national serious mortgage delinquency rate of 2.39 percent.

It also is down slightly from 1.5 percent in the fourth quarter.

Colorado had the sixth lowest delinquency rate in the nation in the first quarter, based on Mortgage Banker Association data, according to McMaken. The only states with lower 90-day delinquency rates were North Dakota, South Dakota, Montana, Wyoming and Alaska.

The lowest 90-day delinquency rate in the nation was found in North Dakota where it was 0.49 percent, and the highest rate was found in Mississippi where it was 4.2 percent.

Meanwhile, 30-day delinquencies for the first quarter were at a nine-year low for the first quarter, and were at the lowest level recorded in any quarter since 2006.

During the first quarter of 2014, 1.71 percent of loans in Colorado were 30-days delinquent, down from 2.18 percent and 2.12 percent, in the first quarter of 2013 and the fourth quarter of 2013, respectively.

“A new low in 30-day delinquencies suggests more declines in foreclosure activity in Colorado, at least in the short term,” according to McMaken.

The foreclosure inventory also fell during the first quarter of in Colorado and has fallen for 14 consecutive quarters, McMaken noted.

Colorado’s foreclosure inventory dropped to 0.94 percent during the first quarter of 2014, falling from 2013’s fourth-quarter rate of 0.96 percent.

The inventory was also down from 2013’s first-quarter rate of 1.38 percent. “What I also have noticed is that we don’t see as many bankruptcies, too,” Spray said. “Those have declined greatly.”

Total bankruptcy filings in Colorado in the first quarter were down 23.9 percent from the first quarter of 2013, according to the Colorado Secretary of State.

Bankruptcy filing declines were led by a 66 percent drop in Chapter 11, or reorganization filings, while Chapter 7, or liquidation filings, were down 9.8 percent. Chapter 13 bankruptcies, also a way to reorganize Chapter 7, or liquidation, filings. were down 9.8 percent. Chapter 13 bankruptcies, in which a debtor repays a percentage of what is owed, were down 20 percent.

All of these are leading indicators that the Denver housing and overall economy have recovered strongly, Spray said.

“I think that is true here, but not everywhere in the U.S.,” Spray said. “We have so few homes for sale in Denver that is driving up prices.”

Falling mortgage delinquencies, foreclosures and bankruptcies paint a healthy economic picture for Colorado and the Denver area, he said. “I think we could all use some good news,” Spray said. “And this is good news.” “Have a story idea or real estate tip? Contact John Rebchook at JRCHOOK@gmail.com. InsideRealEstateNews.com is sponsored by Universal Lending, Land Title Guarantee and 8z Real Estate. To read more articles by John Rebchook, subscribe to the Colorado Real Estate Journal.