Foreclosures in Colorado fell sharply during the third quarter, raising hopes that the state’s foreclosure wave crested last year.
Colorado public trustees reported 7,261 foreclosure filings and 6,454 homes sold in foreclosure auctions during the July-to-September period, according to a report released Thursday by the Colorado Division of Housing.
That represents a 24 percent decrease in filings and a 9 percent drop in foreclosure sales from the third quarter of 2007.
“There just wasn’t as much growth in foreclosures this year, compared to last year,” said Ryan McMaken, community relations coordinator for the Division of Housing. “I don’t think that proves that next year will be a big decline year, but given the degree of the decline, it’s just not looking like there are going to be any more of those huge 30 to 40 percent increase years.”
Richard Wobbekind, an associate dean with the University of Colorado at Boulder’s Leeds School of Business, said he was surprised when the foreclosure rate rose during the second quarter. He had predicted it would drop.
“I’m relieved to hear that the third-quarter data is confirming that belief,” he said.
But, Wobbekind cautioned, the slowing economy could trigger an additional wave of foreclosures that are unrelated to the subprime-mortgage mess.
“But we seem to have gotten into the wave earlier than the rest of the nation, and we seem to be coming out of it a little faster,” he said.
Dick Hinson, vice president of the Aurora Economic Development Council, said the positive news could boost consumer confidence and have a ripple effect through the economy.
“You’ve got to get that confidence factor up so people are more comfortable putting money out for things,” Hinson said. “With confidence comes increased spending. Spending will boost business recovery, and business recovery means hiring.”
For the first nine months of this year, foreclosure filings in the state increased 3 percent over the same period last year and sales are down 14 percent.
If foreclosures continue to drop in the fourth quarter as expected, Colorado will end the year with fewer foreclosures in 2008 than 2007.
Officials attributed the decline to a greater effort by banks and lenders to work with troubled borrowers, as well as foreclosure-prevention counseling, which helped 4,000 households avoid foreclosures.
“Limited or no-doc loans began to disappear from the market in late ’06 and ’07, and that certainly is a factor,” said Mike Rosser, a member of the state housing board, referring to the days when borrowers didn’t have to provide proof of income or ability to repay a mortgage. “Banks are also being more lenient in terms of loss mitigation.”
The report shows that third-quarter foreclosure sales were down 19 percent in Adams County, 25 percent in Denver and 20 percent in Weld County.
They have increased most sharply in El Paso County, where they were up 26 percent; Broomfield County, up 27 percent; and Larimer County, up 13 percent.
“Those areas tend to have slightly higher median incomes, so they were more insulated from the foreclosure drivers early on, but now they’re being more affected by it,” McMaken said.
The expectation is that foreclosures will continue to fall next year, but a sharp increase in job losses could cause that trend to reverse, officials cautioned.
“It’s going to be a few years before we can get back down to historically normal foreclosure rates,” McMaken said.
Byron Koste, director of the real estate center at the University of Colorado at Boulder, said the declining rates might signify that the market is stabilizing.
“I don’t think with one quarter alone we can declare victory quite yet, though we certainly like this report better than anything we’ve seen for a long time,” he said.
“I’m not looking for demons and devils, but it would be nice if the fourth quarter reported a trend rather than an anomaly. We have always felt that Colorado should come out before other places. It would be very nice if this data says it’s going to happen in 2009.”
Margaret Jackson: 303-954-1473 or mjackson@denverpost.com
