Foreclosures in Colorado soared 31 percent last year and have more than doubled since 2003, depressing Front Range home values, a new foreclosure survey Tuesday from the Colorado Division of Housing says.
“One foreclosure begets another foreclosure. You have to ride that wave out and try to do what you can to minimize the damage to neighborhoods,” said Zach Urban, director of housing counseling with Brothers Redevelopment in Denver.
There were 28,435 foreclosures recorded last year in the 43 out of 64 counties where the division obtained counts.
Unless new homebuyers move to the state in unexpected numbers, the areas hardest hit by foreclosures will probably suffer home-price declines before recovering within 18 months to two years, said Kathi Williams, director of the division.
About half of the homes that entered foreclosure in the state last year were lost in public trustee sales, compared with fewer than one in five nationally.
About a third of the foreclosures started were withdrawn. Sandy Hume, Boulder County public trustee, estimates that many homeowners who withdraw their foreclosures still end up selling against their wishes.
“Those withdrawals don’t mean that someone gets to stay in their house,” Hume said.
In 12 percent of the total cases, borrowers caught up on their delinquent payments and “cured” the foreclosure.
The state’s foreclosure problem remains largely limited to the more populated Front Range, from Fort Collins to Pueblo. More than 3 percent of all households in Adams County went into foreclosure last year, up from 2.3 percent in 2005. In Weld County, 2.7 percent of homes had a foreclosure filing, up from 1.9 percent in 2005.
The story is different on the Western Slope, where Mesa and La Plata counties saw foreclosures decline last year compared with 2005.
Last year, The Denver Post examined Colorado’s foreclosure epidemic in a series called “Foreclosing on the American Dream.” The newspaper found that most whose homes were foreclosed on bought houses with no money down, that some signed loans with mortgage payments exceeding half their income, and that in many cases inflated appraisals led to loans that exceeded the values of houses.
The state has launched a foreclosure-prevention hotline (877-601-4673) to serve struggling homeowners. The hotline has received nearly 10,000 calls since fall, Urban said.
“You try to save the ones you can,” Urban said.
A typical foreclosure involves a homeowner who took a zero percent down, or other risky mortgage loan, or who refinanced the equity out of a home.
When a job loss, medical emergency or divorce hits, the borrower falls behind. Weak home-price appreciation may make it difficult for the borrower to sell and cover what they owe, Urban said.
A rising number of foreclosures involve homeowners with adjustable interest-rate loans whose payments are now rising quickly.
“A lot of people who are in problem situations are not subprime borrowers. They are borrowers who weren’t ready for a 2 percent hit on their mortgage rate,” said Michael Thomas, managing partner with Hyperion Capital Group in Aurora.
Thornton homeowner Paul Hernandez blames officials too eager to win new housetops at any cost, even if means destroying the home equity of their current residents.
“If you allow too much building, you are going to hurt the existing citizens of your community. It doesn’t take a lot of brains to figure that out,” he said.
Homebuilders are expected to add 14,000 homes this year in the metro area, despite an eight-month supply of existing homes available for sale and more than 19,000 foreclosures last year.
The Colorado Division of Housing report is an attempt to do a comprehensive survey of foreclosures to measure the extent of the problem.
Colorado counties not included in the survey had small populations, and the foreclosure rates in those counties were not statistically significant.
The housing division survey was also prompted by reports from RealtyTrac, a California provider of foreclosure listings that reported that Colorado had the highest rate of foreclosure filings of any state for last year. RealtyTrac counts foreclosure filings as they move through one of three stages in the process, which can result in one case being counted three times. Critics say that overstates the foreclosure rate.
Staff writer Aldo Svaldi can be reached at 303-954-1410 or asvaldi@denverpost.com.
