At the end of September, there were 9,917 people in the “permanent modification” Home Affordable Modification Program , better known as HAMP.

“We will surpass 10,000 in October,” said Shannon Peer, Director of Housing Counseling at Brothers Redevelopment, the non-profit group that manages the Colorado Foreclosure Hotline and provides free counseling to distressed homeowners in the state. In fact, it may already have happened. “It’s just a matter of counting them and recording the numbers at this point,” he said.

It’s a milestone to cross the 10,000 threshold, he said.

Equivalent of 25% of foreclosures at peak year

“That’s a huge number,” Peer said. “At the peak of the foreclosure crisis in 2009, we were adding about 40,000 foreclosures, so this represents a big percentage of people losing their homes. It is extremely significant to have helped more than 10,000 people to keep their homes.”

From September, 336 people entered the permanent modification program from the required first step, known as the active trial, a bigger than normal month-to-month increase. HAMP typically reduces mortgage rates to even below today’s historically low levels.

“We’ve been seeing an average of 245 to 250 each month,” Peer said

And while the numbers of homeowners entering the program continues to drop slightly to a new low  - 1,121 in September compared with 1,257 in August – that has been the pattern and was expected, Peer said. The U.S. Treasury Department has told loan servicers to pre-screen candidates so they are likely to be accepted into the permanent program. The Treasury Office of the Comptroller reported that HAMP modifications “continue to exhibit lower delinquency and re-default rates.”

Fewer seeking help may be sign economy is stabilizing

A downward trend in people entering the program could be a sign that the Colorado economy is starting to stabilize, Peer said.

HAMP, and it’s sister program, HARP – the Home Affordable Refinance Program – also should stimulate the economy, as people in them will be spending less on their mortgages, giving them more money to spend elsewhere, Peer noted.

So far, nationally, homeowners in HAMP’s permanent modification program have saved an estimated $8.8 billion in mortgage payments. The median monthly savings is $526, more than one third of the median before-modification payment.

HARP, by contrast, is for people with Fannie Mae and Freddie Mac loans who are current on all of their payments. President Obama recently announced that the underwriting guidelines will be eased to allow many people who are under water on their loans – that is, the loan is worth more than the home – can refinance under HARP.

Some observers have criticized HAMP and HARP because they are only reaching a fraction of the people that the Obama Administration initially expected to be helped by them.

But Peer said that both programs not only are helping thousands of people in Colorado, but they are boosting the economy.

“As we know, no single program is going to solve the foreclosure problem or be the right answer for everyone,” Peer said. “HARP should provide more economic stimulus as more people have discretionary income. I would anticipate that the more people are helped by these program it will help us get out of this downturn and we will start to see more of an upswing in our economy.”

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Contact John Rebchook at JRCHOOK@gmail.com

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Colorado Attorney General John Suthers will be honored next month by Brothers Redevelopment for his support of the Colorado Foreclosure Hotline.

The nonprofit Brothers Redevelopment will recognize Colorado Attorney General John Suthers and a number of other individual and organizational “housing heroes” during the agency’s 40^th Anniversary celebration in October.

Suthers is being recognized for his efforts to support the Colorado Foreclosure Hotline, which is managed by Edgewater-based Brothers.

Suthers and the others will be recognized during “Opening Doors: Celebrating 40 years of Housing with Brothers Redevelopment,” from 5:30 to 9 p.m. Thursday, Oct. 6, at the Denver Merchandise Mart, located at 451 E. 58^th Place.  Comedian Josh Blue will headline the event, which will be hosted by popular KOSI 101 morning personalities Denise Plante and Murphy Huston, and feature a networking reception, dinner and a live auction of several artfully adorned doors and fun activities.  The event is presented by Key Sponsors FirstBank and Pillar Property Services, LLC.

Denver's own Josh Blue will perform at Brother Redevelopment's 40th anniversary fest next month.

The cost is $65 per ticket.
In all, ‘Brothers’ will bestow six awards on key individual and organizational contributors, including:

• Sustainability Salute: Colorado Attorney General John Suthers -Since 2008, Suthers has been instrumental in sustaining foreclosure prevention counseling for thousand of homeowners across Colorado.  Thanks to the efforts of the Attorney General and his staff, Colorado has received substantial funding via a settlement with a major mortgage servicer—the majority of which has been directed to fund the Colorado Foreclosure Hotline and its affiliate agencies.  The Attorney General and his staff have also worked with housing counseling agencies across Colorado to alert consumers about the dangers and prevalence of loan modification and other mortgage-related scams.
• President’s Housing Preservation Award: Mennonite Housing Development Corp. - In 2010, the nonprofit Mennonite Housing Development Corporation donated $917,500 to Brothers Redevelopment to apply toward the purchase of the 81-unit William Tell Apartment complex—a federally subsidized independent living complex that houses low-income elderly and disabled tenants. In doing so, the MHDC helped Brothers Redevelopment preserve affordable housing in Central Denver.
• Local Government Champion: Sue Corbett, Brighton Senior Center - As the Director of the Brighton Senior Center, Sue Corbett has been the driver/champion for Brighton Help for Homes—an event that taps into the spirit of service that exists in the growing north metro community to annually serve up to two dozen low-income senior and disabled homeowners.  Corbett works cooperatively with the staff from Brothers Redevelopment to coordinate the event–from fundraising to recruiting volunteers to enlisting and qualifying the senior homeowners who benefit from the program.   Since 2005, Brothers has teamed with Corbett and the city of Brighton to help more than 140 homeowners save tens of thousands in minor, but essential, exterior home repairs.
• Outstanding Local Government Partner: City of Thornton -Since 2002, Brothers has served as the primary partner for the City of Thornton’s Help for Homes Program—an initiative that leverages federal Community Development Block Grant funds to assist the city’s low-income homeowners.  With Brothers Redevelopment as the program’s primary contractor, more than 120 homeowners have received all manner of minor and emergency home repair—from water and furnace replacement to the installation of grab bars in bathtubs and showers.  The successful program has turned into a model for several other metro area communities, including Northglenn, Sheridan, Westminster and others.
• Volunteer Vanguard: PCL Construction - For more than a decade, hundreds of employees from Denver-based PCL Construction have descended on the home of a Brothers Redevelopment Paint-A-Thon client to make significant improvements and save clients thousands in home repairs.   Painting is but a portion of PCL’s contribution to the agency’s senior and disabled clients, as the construction crew also can be counted on to fix and renovate porches, replace siding, build fences and stair rails, repair windows and doors, fix gutters, improve the landscape, trim trees and shrubs, and haul away large items.
• Outstanding Foundation Partnership: Daniels Fund - Throughout its history, Brothers Redevelopment has been fortunate to find support from many caring foundations, including the Daniels Fund. Brothers Redevelopment has directed these funds to its Home Maintenance and Repair Program, an initiative through which the agency helps hundreds of clients with physical and financial limitations complete a variety of repairs that improve their in-home safety and mobility.  Over the past decade, The Daniels Fund has served as the agency’s largest foundation partner—providing more than $300,000 in funding to help the agency fulfill its mission.

In addition to recognizing key supporters, Brothers Redevelopment will use the event to showcase an unprecedented level of service for Colorado’s homeowners.  With the help of community and corporate sponsors and tens of thousands of volunteers,‘Brothers’ through four decades has met the housing needs of more than 83,000 low-income, elderly and disabled clients.

Today, ‘Brothers’ provides housing for more than 575 senior and disabled tenants at 12 independent living complexes in the metro area; provides home maintenance and repair to elderly and disabled homeowners to improve their in-home safety and mobility; oversee the Colorado Foreclosure Hotline; recruits thousands of volunteers to stage an annual Paint-A-Thon for seniors; and provides pre-purchase, reverse mortgage and default counseling to thousands of homeowners annually.

Collectively through these programs, the agency directly serves more than 4,000 clients each year.  Through its efforts to preserve housing accessibility, affordability and safety, Brothers has become a highly credible partner for local officials looking address and overcome some of the region’s most pressing housing challenges.

Tickets may be purchased at Brother’s website at this link. The event’s Paint Brush-level sponsor is the Niesen-Borth Agency.  Additional support for the event is provided by PCL Construction and the Colorado Housing and Finance Authority.  Sponsorships opportunities also remain available. Call 303-202-6340 for more information.

Contact John Rebchook at JRCHOOK@gmail.com

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Brothers Redevelopment paid $5.1 million for the William Tell apartments in Uptown.

The nonprofit housing agency Brothers Redevelopment paid $5.1 million for the 81-unit William Tell apartment community in Uptown, continuing itss efforts to provide affordable housing available for low-income and disabled residents.

Brothers leveraged a  $917,500 grant from the Mennonite Housing Development Corp. and worked with FirstBank and Funding Partners to purchase the 47-year-old building at 1599 Williams St.  The building includes studios and one- and two-bedroom subsidized units for qualified low-income tenants.

Condo-conversion prevented

“Both Brothers and the MHDC were anxious to acquire a complex located in an area that is beyond the financial reach of many low-income senior and disabled residents,” said Mary Ann Shing, Brother’s president. “Through this partnership-driven purchase, we’re able to ensure that William Tell residents won’t have to worry that the building might be redeveloped or converted to market-based condominiums.”

The nonprofit MHDC made the grant available to Brothers after selling its HUD-assisted Yarrow Gardens Apartment complex in Arvada. The MHDC worked with HUD to redirect proceeds from the sale toward the preservation and rehabilitation of affordable housing in the Denver metro area.

“We are pleased we could assist BRI to preserve this valuable property,” said Jim Banman, MHDC’s president. “Our mission of providing decent, safe and affordable housing continues under BRI’s able leadership.”

Just a block from East Colfax and 17th Avenue commercial corridors, William Tell is  centrally located and offers its tenants convenient access to transportation, shopping, dining and entertainment.

It is also one of the few affordable housing options available to low-income, senior and disabled families in the neighborhood. To preserve such accessibility and affordability, Brothers Redevelopment has quietly worked to increase its portfolio in Capitol Hill and other nearby neighborhoods.

Brothers Redevelopment apartment portfolio

In 2006, the agency acquired the Garfield Apartment complex at 2830 Garfield St., just north of Denver’s City Park. Two years later, the agency purchased the nearby 54-unit Corona Residences at 1445 Corona St. The agency also owns the 8-unit Clayton Street Residences at 1455 Clayton St., in the heart of  Capitol Hill.

The acquisition of William Tell increases to 12 the number of federally subsidized independent living complexes that Brothers owns and operates in the Denver area. Collectively, Brothers now makes 576 affordable housing units available to low-income residents. All Brothers-owned sites are regularly inspected and audited to ensure sound stewardship, routine maintenance and ongoing capital improvements.

Offered at 30 percent of a qualified applicant’s adjusted income (per federal guidelines), all of the agency’s properties feature a wide-array of amenities, including energy-rated appliances, inviting common spaces and off-street parking. Where applicable, the agency also works with resident leaders to establish a variety of recreational and wellness activities.

“Resident comfort, curb appeal and federal compliance are our top priorities,” Shing said. “Our tenants and neighbors will see our pride in operation and ownership.”

For more information about Brothers Redevelopment’s independent living complexes for senior and disabled residents or to request an application, call 303-202-6340 or visit  www.brothersredevelopment.org.

To see what is available for sale in the Capitol Hill area, please visit this COhomefinder.com link. Contact John Rebchook at JRCHOOK@gmail.com

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“Is 2011 going to be a year of recovery? I don’t know yet,” said Ryan McMaken, spokesperson for the Colorado Division of Housing, which released the foreclosure report.

Hotline calls fall

The Colorado Foreclosure Hotline, 1-877-601-HOPE, received about 2,400 calls in January. While still a high number, that was about 31 percent lower than the 3,500 calls in January 2010.  Year-over-year numbers in December showed  similarly large drop in calls. Calls to the hotline are considered a leading indicator, because people who receive the first notice of a foreclosure, also given the hotline number to call for free advice from a HUD counselor.

Shannon Peer, who heads the counseling efforts and the non-profit Brother Redevelopment, said he is surprised there aren’t more calls. Also, with 42,962 new filings last year, foreclosures remain at an extremely high level, and they may just be leveling off at a “high plateau,” he said. And while it is likely the Denver area has seen the worst, he said until “more folks get jobs,” the end of the foreclosure crisis is not in sight.

An increasing number of people are seeking help are from the Western Slope and rural counties, said Stephanie Riggi, who manages the hotline. “We do not have many counseling agencies in the mountain areas, which is leading us to do more over-the-phone counseling, which is not as effective as face-to-face meetings.” McMaken said in resort communities such as Eagle County, which includes Vail, earlier foreclosures were for time-share units, but now more people seem to be losing their homes because of the downturn in the construction industry.

McMaken said counties  such as Teller, Fremont, Mesa, Delta and Montrose, “are all getting worse.”

Contact John Rechook at JRCHOOK@gmail.com

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Earlier today, the Colorado Division of Housing released a report published by InsideRealEstateNews that contains mostly good news regarding people in the state losing their homes in foreclosures. Foreclosure activity in November has hit a 20-month low, and it appears there have been enough months of drops in filings and sales to call it a trend.

But can it be sustained, or is this the eye of a foreclosure hurricane, which will buffet homeowners in Colorado in the coming months?“We realize some of the declines in the filings and sales is because of the advent of lenders reviewing foreclosure paperwork this fall, starting in October,” said Shannon Peer, director of housing counseling at the non-profit Brothers Redevelopment. Peer said talking with public trustees, it appears that foreclosures being reviewed “have not gone back into the system yet,” and likely will be re-filed in the coming months. A number of large lenders, such of Bank of America and others, halted processing foreclosures in light of attention on “robo-signing” of foreclosure documents that may not been properly reviewed. Indeed, Colorado Attorney General is joining with every other attorney general in the nation in investigating the foreclosure practices of banks.

Foreclosure hotline busy

Stephanie Riggi, who runs the Colorado Foreclosure Hotline (1-877-601-HOPE), said while there has been some seasonal declines in calls in December, there are still are a lot.

“We have right under 2,000 calls for this month, and in my expert opinion, that is a pretty high number,” Riggi said. “And a lot of these calls are pretty urgent. These people are in pretty desperate situation. I think when we are returning from the holiday break, we are going to be hammered by phone calls in January.”

Zachary Urban, director of housing counseling at the Adams County Housing Authority, said he believes there has been an “artificial depression” of foreclosure filings because of people entering temporary modifications under programs, such as HAMP, the Obama Administration’s Home Affordable Modification Program, or other lender programs. If they are not accepted into the permanent modification programs, “that could mean that filings will either remain steady or go up a little bit. There are a lot of unknowns and still some very real risks.”

Jobs are keys

Ryan McMaken, spokesman for the Colorado Division of Housing, agreed, although he said it is encouraging that foreclosure filings have been dropping off for more than a year. He noted there were “big bumps” in filings in 2008 and 2009, reflecting job losses. “Now that we are seeing some stability in the job market that appears to be changing,” McMaken said. “Surprisingly, home prices did not decline that much for single-family homes. And as our earlier report show, demand is strong for single-family home rentals. They are very tight. That bodes well for investors wanting to buy homes.” He also noted that the Mortgage Bankers Association is showing fewer 30-day, 60-day and 90-day delinquent mortgages in Colorado.

The big questions, McMaken said,  are: ”How much inventory is out there right now that we don’t know about? Is there a lot not being processed out?”

Those are homes are sometimes described as the “shadow market” and could be the next foreclosure housing shoe to drop, some experts worry.

But even if the worst-case scenario of suddenly be swamped with thousands of new distressed homes on the market, McMaken said that the numbers of people losing their homes must drop dramatically before the state returns to a normal market, based on historical data.

“That could take years.”

Contact John Rebchook at JRCHOOK@gmail.com

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That is more than a 13 percent drop from the 2,555 people in the Home Affordable Modification Program, a key part of the Obama Administration’s Making Home Affordable Program.

Cancellations exceed starts

Through September, 699,925 active trial modifications have been canceled nationwide, while 173,592 active trials have been started. The government, however, says it is still on track to help 3 million to 4 million homeowners with HAMP by 2012.

Meanwhile, there were 6,600 Colorado homeowners in the permanent modification program, almost a 3 percent increase from the 6,469 in August.

Earlier in the year, the government instructed servicers to pre-screen people applying for HAMP, in order to improve their chances of being accepted into a permanent modification. The permanent program typically involves lowering their mortgage rate to a level even below the historically low market rates.

Reasons for being dropped

The government cited three main reasons for homeowners being bounced from the trial program:

• Insufficient documentation
• Trial plan payment default
• And ineligible borrowers: first-lien housing expense is already below 31 percent of household income.

The government, for the first time, this week also reported the status of 524,695 homeowners who were canceled from the HAMP trial modification.

HAMP alternatives

Of those, 232,004, or 44.2 percent, are in some alternative modification program. Some 33,259, or 6.3 percent, are either doing a short sale, in which the lender accepts less than the amount of the loan, are involved in a deed in lieu of foreclosure transactions.

More than twice that, 67,441 or 12.9 percent, have started the foreclosure process.

And a large number – 111,614, or 21.3 percent, are no longer in the trial program, but no further action has yet been taken.

Bank of America biggest player

The biggest player, as far as those servicing loans – that is, they collect monthly mortgage payments and handle any loan modification –s is Bank of America, with 116,163 homeowners. Of those, 58,424 are in limbo, with no action underway. Wells Fargo was No. 2 with a total of 116,163, followed by JP Morgan-Chase Bank, with 116,163 and 112,816 homeowners whose trials were canceled, respectively.

This is important information, said Shannon Peer, director of housing counseling at the non-profit Brothers Redevelopment, which manages the Colorado Foreclosure Hotline, 1-877-601-HOPE.

“It seems like we continue to a see a significant, diminishing number of people entering the HAMP program, but what is interesting, is that more people seem to be going to alternative programs,” Peer said. “That is what we are seeing and that is what the lenders are telling us.”

He said that the $75 billion HAMP program was created to deal with people saddled with so-called “toxic” loans that carried low initial rates, but quickly skyrocketed. And because their homes typically lost value, it was often impossible for them to refinance.

“Now, the problem is unemployment,” Peer said. “It is the economy and the lack of jobs.”

Nationwide, there are 466,708 homeowners in the permanent program, a far cry from the goal of as much as 4 million.”

“The program may not ever help 4 million people, because the underlying problem has changed,” Peer said. “But that does not mean HAMP has been a waste. Most of that $75 billion has not been spent. It will be interesting to see if the government decides to re-allocate the money in a different way, as the problems that caused foreclosures have shifted so much.”

It’s also possible, he said, that if more high-paying jobs are created, the government might not need to spend any more money to keep people from losing their homes.

“Maybe the market will heal itself if we have some good job creation,” Peer said.

One idea that has been floated – paying lenders more money to modify loans – worries him, though.

“If you throw more money at the servicers to modify loans, I worry that will encourage them to modify loans that they should not, and it only delays the inevitable and we will see a great number of them default, anyway,” Peer said “It seems a more reasonable solution is to the deal with the underlying problem, which is a lack of jobs. We do not need a mortgage fix. We need an economy fix.”

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HUD Regional Director Rick Garcia unveils a $41.3 million program to help distressed homeowners in Colorado who have suffered a drop in income, as Shannon Peer and Mary Ann Shing of Brothers Redevelopment watch. Shing is the president and CEO of Brothers and Peer is its housing counseling director.

Colorado will receive almost $41.3 million under the federal government’s attempt to help struggling homeowners facing foreclosure, Rick Garcia, U.S. Department of Housing and Urban Development Region VIII director announced today.

Colorado ranks No. 10 in funding of the 32 state and Puerto Rico sharing in HUD’s $1 billion Emergency Homeowners Loan Program, or EHLP, that Garcia unveiled today at a press conference at the non-profit Brothers Redevelopment’s headquarters in Edgewater.

Tool to fight foreclosures

“Obviously, the Emergency Homeowner Loan Program is only important tool in our toolbox as we fight to continue our nation’s economic recovery,” Garcia said. “And it won’t help every family struggling to keep their home. But with new funding and a new commitment to helping responsible homeowners who have fallen on tough times, President Obama, our local leaders and I believe we can tackle tough challenges. We can fight foreclosure and unemployment. And we can help our communities recover.”

Qualifications laid out

To qualify for the new program, which Garcia said will become effective in December:

• Borrowers must be at least three months delinquent in their payments and have a reasonable likelihood of being able to resume repayment of their mortgage payments and related housing expenses within two years.
• The property must be the principle residence of the borrower, and eligible borrowers may not own a second home.
• The borrower must have suffered at least a 15 percent reduction income and have been able to afford their mortgage payment prior to the event that triggered the lost income.

The new emergency loan program will provide a forgivable, deferred payment “bridge loan,” to qualified borrowers. It will be a zero-interest loan, non-recourse, subordinated loan. Non-recourse means that the borrower is not personally liable, and if there is a default, the lender’s only recourse it to take over the underlying property.

HUD will delegate key program administration functions to the non-profit NeighborWorks America, a national network of affiliated counseling agencies. Nonprofit housing counselors who are part of the National Foreclosure Mitigation Counseling Program will coordinate counseling, preparing documents, and outreach. HUD will use NeighborWorks to contract with loan servicing groups, which handle the day-to-day functions of handling things such as collecting mortgage payments.

In addition, state housing finance agencies that operate similar programs will receive allocations to fund emergency loans for borrowers.

Government helping market

When InsideRealEstateNews asked Garcia about critics who claim that the housing market would recover faster it the government stepped aside and let the market heal itself, Garcia said that, “I think largely the market probably is designed to heal itself.” However, the government does “feel some responsibility to stabilize communities,” as the foreclosure spiral impacts not only the impacted borrowers, but can lower property values and hurt entire neighborhoods.

“Most important of all is that these resources reach the families and communities that need it the most,” Garcia said. The EHLP is combined with the Treasury Department’s “Hardest Hit” initiative, which combined provides a {$8.6 billion investment that will ultimately help a broad group of struggling borrowers across the country.”

Funding for the EHLP comes from the Dodd-Frank Wall Street Reform and Consumer Protection Act.

One size doesn’t fit all

Shannon Peer, manager of housing counselors at Brothers Redevelopment, said that calls to the Colorado Foreclosure Hotline, 1-877-601-HOPE, continue at record levels.

“And the main reason we are most people are calling today, and probably for the last eight to 12 months, is because of unemployment or some loss of income,” Peer said. He said that is why they are pleased to have “this new tool” to help distressed homeowners. While he welcomes the program, “there is no single fix to this crisis,” Peer added.

Zach Urban, spokesman for the Adams County Housing Authority, said he worries the new program will help lenders more than homeowners. “It’s sounds to me like a $1 billion payday for lenders,” Urban said. But he said the jury is still out on the program until more details are released. “If it does help homeowners, then I am in favor of it,” he said.

Stephanie Riggi, manager of the Colorado Foreclosure Hotline, agreed.

“I wouldn’t say I’m skeptical,” Riggi said. “I think for our counselors to have more options to offer to homeowners is always a good thing. We just don’t have a whole lot of details yet.”

Contact John Rebchook at JRCHOOK@gmail.com

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There were only 3,329 Colorado home owners participating in “active trials” in the Home Affordable Modification Program in July, a 28.7 percent drop from the 4,670 in June. Homeowners seeking to reduce their mortgages in order to avoid foreclosure, must first enroll in the active trials portion of HAMP, before they can receive permanent modifications. There were 6,124 Colorado homeowners in the Permanent Modification program in July, slightly more than an 8 percent increase form the 5,656 in June.

Documents upfront, reduce later dropouts

The number of people in the first stage of the program, both nationally and in Colorado, has been dropping since the U.S. Treasury and the U.S. Department of Housing and Urban Development, required more upfront documentation before homeowners could be accepted into the trial program, which lasts at least three months. The new rules went into effect on June 1, but many loan servicers began implementing the changes even before June.

The government wants lenders to pre-screen applicants to increase their chances of being accepted into the permanent modification program. The $75 billion program was launched in March 2009, and many homeowners ended up being in the trial program for many months, only to be told they do not qualify for the permanent modification program.

Programs not cutting the mustard

Ron Woodcock, a broker with RE/MAX Southeast, questions the value of HAMP and a sister program, HAFA, or Home Affordable Foreclosure Alternatives.

“If you ask me, HAMP and HAFA, are not good stuff,” Woodcock said. “As they get tougher on the criteria for the trial modifications, it may lead to higher foreclosures.”

For more than two decades, first in Florida and now in Colorado, Woodcock has specialized in selling distressed properties, either foreclosures, or increasingly, short sales. A short sale is when a lender accepts less than the amount of the mortgage.

“I’ve been doing a lot of short sales for people who were in trial mods,” Woodcock said. “They were denied into the permanent program. They were in HAMP or something similar. If they could not maintain their payments, they are back to square one.”

Consumers: Many options available

Shannon Peer, director of Housing Counseling at Brothers Redevelopment, which manages the Colorado Foreclosure Hotline, said when HAMP first began under the umbrella of the Making Home Affordable Program, lenders were basically enrolling people in the trial program over the phone.

“So a very large percentage of the pool accepted into the trial program could not move on the permanent modification,” Peer said. “Now, people have to prove to them with some documentation that they are good candidates for the permanent modifications.”

Yet, HAMP does not work for a lot of people, because of the shift from people saddled with toxic loans that they couldn’t afford to more basic economic woes, he said.

“The root problem for the majority of the people now is unemployment or under-employment,” Peer said.

And this month, yet another federal program was launched, which is designed to help people keep their homes who are unemployed.

“But usually you have to start with HAMP,” Peer said. “That is why it is important for consumers to speak with HUD-certified counselors. When they are talking to the loan servicers, they will ask what the borrower’s ‘options’ are, not his option.”

He said homeowners who are facing losing their homes should be willing to roll up their sleeves, and not expect that their lender will tell him all of his options. “A lot of lenders will tell you several options, but you can’t be assured that they will tell you everything that is out there,” Peer said. Nationally, more than half of the homeowners in canceled trials receive alternative modifications, become current, or pay off the loan. Insufficient documentation, missed trial payments or mortgage payments already less than 31 percent of the home owner’s income are the man reasons for cancellations.

Colorado did slightly better, as a percentage drop, than the nation as a whole. Last month, there were 255,934 homeowners in the Trial Modification program, a 29.7 percent drop from the 364,077 in June. So far, 616,839 trial modifications have been cancelled across the country, while only 12,932 permanent modifications have been canceled. There are currently 421,804 permanent modifications, while there are an estimated 3 million delinquent loans and almost 1.5 delinquent borrowers, who could potentially be eligible for HAMP.

Billions saved

And for those who qualify, the savings are significant. The median monthly payment for a homeowner receiving a permanent modifications dropped to 36 percent to $839 from $1,426, a $513 monthly savings. The aggregate reductions in monthly payments for borrowers in active trials and permanent modifications totals more than $3.1 billion.

Contact John Rebchook at JRCHOOK@gmail.com or 303-945-6865.

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Based on an average loan size of of $188,349, since the hotline was launched in October 2006, HUD-approved housing counselors have helped 21,530 of 23,48 clients they have met in person, about a 92 percent success rate with those who have completed the counseling process.

Dollar value even surprises insiders

The $4 billion figure may surprise people.

“It surprised us,” said Stephanie Riggi, manager of the hotline. “We did the math and we knew it was going to be a big number, but not the magnitude of it.”

Riggi said that one of the immediate benefits, in addition to the homeowners, is to the lenders, which held the loans that were in danger of taking back. Foreclosures are very expensive to banks.

“”That’s $4 billion in bank loans that were kept off their books as bad loans,” she said.

Finger-pointing played down

Riggi said one reason that the hotline has been successful, is that it is a collaborative effort with a large number of players.

“We work together,” Riggi said. “It’s easy to point fingers or blame everyone from the homeowner to the lenders. But instead of assigning blame, what we do is try to resolve the issue. That means homeowners, lenders, Realtors, and government entities, like the Colorado Division of Housing, are all working together.”

“That is excellent news,” said Ryan McMaken, of the Colorado Division of Housing, which helped launch the hotline at 877-601-HOPE, which has been heralded as the first of its kind in the country, as well as one of the most successful in the nation.

“To put that $4 billion in perspective, the median price of a home in Colorado is about $200,000, so by that measure it is the equivalent of keeping 20,000 of homes out of foreclosure,” McMaken said.

That is about the equivalent of every house in a city the size of Littleton.

“Another way to look at it, $4 billion it is about 60 percent of the $7 billion discretionary Colorado state budget,” McMaken said.

Other comparisons to help you get your arms around $4 billion: You could buy 8 million Ipads, or 1.4 million top-of-the-line Prius’s, or 139,178,885 shares of BP with the money.

Keeping homes out of foreclosure, of course, is an immediate benefit to the homeowners in question. But the over-all impact is more far-reaching.

For one thing, it will help stabilize home prices in Colorado, compared to other states, said economist Patty Silverstein, of Development Research Partners.

McMaken agreed.

Other states in worse shape than Colorado

“I think when the final analysis is done, and Colorado fared better than most states in maintaining values during this housing crisis, the long-term affect could to make Colorado more attractive to lenders and cheaper rates for consumers,” McMaken said. “Clearly, there already is a large benefit to the financial institutions that hold these loans in their portfolios. Now they have performing loans.”

But that doesn’t mean that the original homeowners are still in the homes. Increasingly, more of these homes are ending up as short sales, in which the lenders take less than the mortgage amount.

Still, just getting lenders to work with borrowers is a big improvement, McMacken said.

“If you go back to 2006 and 2007, financial institutions were very reluctant to do any kind of loan modification program,” McMaken said. “It used to mystify us why they seemed willing to let the home fall into foreclosure, which was a very expensive proposition, rather than modify the interest rate and continue to make money on the loan.”

Part of the reason likely has to do with accounting rules, which forced banks to immediately take a loss on the difference between the original interest rate and the lower one. Also, McMaken notes that banks did not have loss mitigation workforces in place to deal with the huge volume of distressed real estate, as this was the first nationwide housing price collapse since the Great Depression.

Also, federal housing programs such as the Making Home Affordable Program were not yet in place.

Hotline a national model

Ron Woodock, a member of the Colorado Foreclosure Prevention Task Force and the Colorado Housing Counselor Coalition, said that the hotline is a model for other states.

“I often talk about how I came here from Florida, and I still don’t think Florida has a hotline like this, even though the foreclosure problem there is many, many times worse than here in Colorado,” said Woodcock, a broker with RE/MAX Southeast.

Woodcock said he doesn’t think that many people are aware of the $4 billion impact of the hotline. And some people in real estate and mortgage industries privately are skeptical that the hotline is providing the punch it claims.

“This has been one of the beefs I have had with people,” Woodcock said. “An amazing amount of people do not think that the foreclosure impact has had any impact or should even exist. That’s a bunch of crap. The truth is, it has been amazing. I have been involved with it since its inception in 2006 and I have been up to my eyeballs with every aspect of the housing crisis in Colorado. I have to tell consumers: Don’t try to do it on your own. Call the hotline and speak with a HUD-counselor. If you don’t, good luck. You will be thrown into the lion’s den.

The Colorado Foreclosure Hotline can be reached at 877-601-HOPE. It is managed by Brothers Redevelopment in Edgewater.

Contact John Rebchook at JRCHOOK@gmail.com or 303-945-6865

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There were 2,633 foreclosure filings in 12 of Colorado’s largest counties in May, a 17.7 percent drop from the 3,198 filings in May 2009, marking the lowest point in foreclosure activity in the past 18 months, shows a state report released today.

The report by the Colorado Division of Housing appears to be the strongest proof yet that the foreclosure crisis that has gripped the state for several years, is finally waning.  However, homeowners losing their jobs remains a dark cloud hovering over the state’s housing market, which could mean that thousands of homeowners will still suffer the pain of losing their homes.

Still, the latest numbers are encouraging.

Surprisingly good news

“I would say it is good news,” said Ryan McMaken, of the Colorado Division of Housing, and author of the report. “It is waning. As far as new foreclosure activity, there is a slow decline.”

McMaken had predicted decline, based on previous foreclosure patterns, an improving housing market, and government and lender programs that that provide help for people about to lose their homes.

“But I was surprised how low the numbers were,” McMaken said. “You could say it was unexpectedly low. The trend, going back to April of last year, overall, has been to go down.”

In the first five months of the year, there were 15,330 foreclosure filings, a 6 percent drop from the 16,310 filings from January to May of 2009.

“That may be more reflective what is happening the market and give a more realistic and accurate portrayal of the market than 18 percent drop from May 2009 to this May,” McMaken said.

Foreclosure sales at public trustee auctions, meanwhile, rose 18.3 percent to 1,459 in May from May 2009, when there 1,233, although they fell 19.2 percent from April, when there were 1,806. Sales represent homes that went into foreclosure many months – and even years – before the home returned to lenders. And the year-over-year difference partially reflects the low number of foreclosure sales that occurred last spring due to last year’s voluntary moratoria on foreclosures, McMaken noted.

Bad economy, not bad loans, the culprit

Zach Urban, of the Adams County Housing Authority, said the bad economy, and not bad loans are driving foreclosure activity today.

Urban researched foreclosure activity in Adams County and found that it was taking an average of 32 months from the the loan originated until the home went into foreclosure. “You have to put this into context,” Urban said. “You can’t have foreclosures, if you don’t have loans. You can’t have a forest fire if you do not have enough fuel to keep the fire growing.”

When Ron Woodcock, a broker with RE/MAX Southeast came to the Denver area from Florida, almost all of his clients were people who could not afford their mortgages, which were adjusting upward. Those loans, such as option-ARMs and other subprime mortgages, have largely worked their way through the system.

“Now, I am working on 17 short sales and every single one is because the homeowner lost their job,” Woodcock said. A short sale is when a lender agrees to accept less for the home than the outstanding mortgage.

Help coming for those who lost their jobs

That is the experience of HUD counselors who man the phones at the Colorado Foreclosure Hotline, said Stephanie Riggi, who manages the hotline at 1-877-601-HOPE..

“A high number of our calls are from people who have decent, fixed-rate mortgages,” Riggi said. “They have lost their jobs or they are suffering from reduced income.”

She noted that the original government programs weren’t designed for homeowners who lost their jobs, but rather to provide assistance to people saddled with loans that were spiralling well above what they could afford, at a time when their home values were dropping.

“But new programs addressing people losing their jobs will go into effect on Aug. 1,” she said. “These are called forbearance programs for people facing financial hardships.’

Broker Woodcock said that homeowners in jeopardy of having trouble making their mortgage payments, should not try to deal with it alone. “There are so many resources available at no cost to people,” Woodcock said. “People who try work it out themselves, are probably setting themselves up for failure. Your much more likely to get some help if you talk with a HUD-approved counselor.”

And Shannon Peer, director of counseling at the non-profit Brothers Redevelopment Inc. in Edgewater, said that it is too early to say that the we have won the war against foreclosures.

“We are still facing such a high level of foreclosures, it is going to b a long period before we are out of the woods,” Peer said.

County	May 2009	May 2010	YTD 2009	YTD 2010
Adams	430	379	2440	2182
Arapahoe	465	410	2402	2346
Boulder	113	97	529	563
Broomfield	28	25	138	130
Denver	489	375	2617	2210
Douglas	199	136	1013	1022
El Paso	468	382	2299	2070
Jefferson	334	315	1622	1638
Larimer	172	129	880	734
Mesa	95	96	346	645
Pueblo	117	114	666	578
Weld	288	175	1358	1212
Total	3198	2633	16310	15330

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