Fewer Coloradans lost their homes to foreclosure last year, raising hopes that the state’s housing market may have bottomed.
But rising job losses and a softening economy could delay any recovery, analysts caution.
“Our forecast is for a high level of foreclosures in 2009, but below 2008 levels,” said Patricia Silverstein, an economist with Development Research Partners in Littleton.
Foreclosure filings fell 2 percent in Colorado last year, while the number of completed foreclosures fell 16 percent compared with 2007, according to a report Monday from the Colorado Division of Housing.
Public trustees recorded 39,307 foreclosure filings in the state last year, compared with 39,915 in 2007. The number of “completed” foreclosures, those that went to auction, fell from 25,320 in 2007 to 21,301 in 2008.
Foreclosure-prevention efforts, an extension of the time borrowers have to rework troubled mortgages and a more accommodative stance by lenders, are keeping more foreclosures from reaching auction, said Ryan McMaken, a spokesman for the Colorado Division of Housing.
A change in Colorado law at the start of last year gave borrowers 120 days to cure a delinquency, double the 60 days under the previous system.
Lenders, facing a huge backlog of cases, are taking longer to process foreclosures and are accepting terms they might have rejected in the past, said Ron Woodcock, a Realtor with Re/Max Southeast who specializes in helping delinquent borrowers negotiate with lenders.
Large-scale bank acquisitions are also slowing some foreclosures down, he adds.
Some lenders, such as Wells Fargo and Chase, have issued moratoriums on foreclosures as they wait for the federal government to issue new standards on modifying mortgages. The standards are due March 4, said Terry Jones, president of the Colorado Mortgage Lenders Association.
Compared with other states, Colorado was early in getting borrowers and lenders to talk to each other to resolve a loan default, he said.
“We in Colorado tried to take a proactive approach early on and that is bearing fruit,” Jones said.
Silverstein sees another trend at work.
Loans with features such as adjustable interest rates, interest-only payments, and low or no down payments are much more likely to go into default than traditional fixed-rate mortgages.
The average age for a loan in foreclosure is about three years, she said. The peak in “exotic” mortgages locally came in 2004, making 2007 the logical year for a peak in foreclosure activity, Silverstein said.
Although many borrowers still face interest-rate adjustments, nontraditional mortgages have fallen out of favor and should represent less of a problem going forward, she said.
But other stresses are emerging. The state’s Foreclosure Hotline is reporting a high volume of calls in February, with more people reporting a loss of income that could cause them to miss mortgage payments.
“It is much more difficult to work with a homeowner who is not employed,” said Stefanie Riggi, administrator for the call center.
Adams County continued to report the worst foreclosure rate in the state, with 2.3 percent of occupied homes experiencing a foreclosure sale. Park, Weld, Denver and Arapahoe counties were next, with rates ranging from 1.9 percent to 1.6 percent. The state average is 0.54 percent.
Those counties, however, all experienced a sharp decline in foreclosure sales last year.
El Paso and Mesa counties saw foreclosure filings and sales increase last year, the only two counties in the state where that happened, McMaken said.
Aldo Svaldi: 303-954-1410 or asvaldi@denverpost.com
