Colorado continues to struggle with a stubbornly high foreclosure rate, but a smaller percentage of borrowers are behind on payments here than in the country as a whole, according to a report Thursday from the Mortgage Bankers Association.
In Colorado, 4.32 percent of the 1.02 million loans the MBA tracks were delinquent and 1.71 percent were in foreclosure as of the end of September.
Foreclosures remain slightly above the national rate, which hit a record in the third quarter, but delinquencies are significantly below the U.S. average.
“Other states are building up to such a large foreclosure problem that Colorado is looking better,” said Ryan McMaken, a spokesman for the Colorado Division of Housing.
A foreclosure survey the division is working on shows that Colorado has suffered more foreclosures in the first nine months of this year than during all of last year, McMaken said.
And more homes that enter foreclosure are being handed back to the lender. But the situation is more dire in other states.
Home foreclosures in the U.S. reached an all-time high during the third quarter as more borrowers fell behind on their payments, the MBA found.
More than 5.81 percent of U.S. mortgages were delinquent 30 days or more during the third quarter, the worst showing since 1986. A record 1.69 percent were in foreclosure at the end of the quarter, according to the MBA, which has records going back to 1972.
The situation among sub prime loans is especially worrisome, with 16.7 percent delinquent nationally and 6.9 percent in foreclosure. In Colorado, 12.5 percent of subprime loans were late and 7 percent were in foreclosure.
Colleen Trapp, 23, is among those who expect to lose their homes. She shares a home in Aurora with her mother and children.
The monthly payments on her adjustable-rate mortgage have risen from $1,300 at the start of the year to nearly $2,000. Falling property values in Aurora have left her owing more than the house is worth, an increasingly common predicament.
“We got caught in the ARM mortgage that everybody is in trouble with,” Trapp said. “The payment just kept climbing and climbing.”
Trapp had expected to start a job at Frontier Airlines on Monday but found out this week that that won’t happen.
That development isn’t entirely unconnected to the spreading housing slump.
Rising mortgage defaults have forced the Federal Reserve to cut interest rates to shore up the economy. Those rate cuts, however, make the U.S. dollar less attractive to foreign investors, decreasing its value.
As the dollar declines against foreign currencies, more dollars are needed to buy a barrel of oil, making jet fuel more expensive.
Hit by unexpectedly high fuel costs in the third quarter, Frontier said Wednesday that it would eliminate 100 positions to stem losses.
Trapp, without her new job, is now at a much greater risk of losing her home.
President Bush announced an agreement Thursday with the nation’s largest lenders that could assist up to 1.2 million subprime borrowers facing larger payments from adjustable-rate mortgages.
Most who seek help will be offered a refinance into fixed- rate loans secured by the Federal Housing Administration.
A fraction are expected to qualify for a five-year freeze on their initial “teaser” rates if they haven’t missed a payment on a subprime loan made between 2005 and July 31.
The loans must face a rate hike in 2008 or 2009, must be for owner-occupied homes and must not be “stated income” loans that didn’t require verification of income.
Those seeking more information on the program can call a hotline: 888-995-HOPE.
Among subprime loans with an adjustable rate, one of every five are delinquent and one of every 10 were in foreclosure during the third quarter, according to the MBA.
Aldo Svaldi: 303-954-1410 or asvaldi@denverpost.com
