Mortgage delinquencies rose again along the Front Range in the first three months of this year, a trend that could further delay a recovery in the housing market.
A larger share of borrowers fell 60 days or more behind on their mortgages in Adams, Boulder, Denver, Douglas, Jefferson and Larimer counties in the first quarter than in the fourth quarter of 2007, according to credit bureau TransUnion.
About 6.4 percent of borrowers in Adams County, the hardest-hit county, were 60 days or more behind on their mortgage payments in the first quarter, according to TransUnion. Larimer had one of the biggest increases in late payers at 27.4 percent.
But the news isn’t all bad. Mortgage delinquencies fell slightly in Arapahoe and Weld counties, and Colorado’s overall delinquency rate, 3.18 percent, fell below the national average, 3.23 percent.
“Unfortunately, a lot of those adjustable-rate mortgages have been resetting, and people who were betting on a continued appreciation in real estate values are getting caught,” said Keith Carson, a senior consultant with TransUnion Financial Services Group.
Chicago-based TransUnion, one of the big three credit bureaus, anonymously samples 27 million credit files every quarter to get a sense of how consumers are handling their debts.
The company is forecasting that the mortgage delinquency rate will rise to 4 percent nationally by the end of the year and that delinquencies won’t peak until late 2009.
Carson said the 60-day-late benchmark is an important one because few households have the financial resources to get caught up once they fall that far behind.
Rising delinquencies point to more foreclosures, which are typically initiated after three months of missed payments. That, in turn, likely will put additional downward pressure on home prices in many markets.
Cecil and Roberta Nevins of unincorporated Adams County are among the thousands of homeowners in Colorado trying to get caught up.
The elderly couple, struggling with health problems, were somehow qualified for an adjustable-rate mortgage that consumed nearly 60 percent of their fixed income.
They managed to pay it, until the interest rate adjusted higher.
“We can’t afford it with the payment on the mortgage going up every time you turn around,” said Roberta Nevins. “We fell behind about six months ago.”
The couple, who could lose their home at a foreclosure auction in September, turned to the Association of Community Organizations for Reform Now for help.
Donald May, executive director of the Adams County Housing Authority, said rising mortgage payments combined with falling home values are leaving many borrowers desperate to find a way out.
“We have not seen a lot of creativity on the lender side to take into consideration that the value of the home has dropped and to re-evaluate,” May said.
Most lenders, he said, simply add on unpaid amounts rather than modifying the interest rate or reducing the mortgage amount to account for current market conditions.
In the past, consumers who got into a financial bind would let the credit cards slip first, then the car loans and finally the home mortgages.
“There has been some anecdotal evidence indicating that is not the case currently,” Carson said.
TransUnion’s research shows that a larger percentage of borrowers were 60 days or more behind on their home mortgages (3.23 percent) than were delinquent on one or more credit cards (1.19 percent).
In Colorado, credit-card delinquencies are running 1.13 percent, slightly below the national average, despite the state having the eighth-highest average credit-card balances in the country.
Aldo Svaldi: 303-954-1410 or asvaldi@denverpost.com
