What's the TRUTH about Colorado's Dubious Title as "Foreclosure-Capital" of the US?

by Cheryl Craig
RE/MAX of Boulder, Inc.

It is true Colorado has seen a 31% rise since 2001 in the number of foreclosures filed against delinquent homeowners. However, consider the following:

* According to a Colorado Division of Housing report, "RealtyTrac (a California provider of foreclosure listings)... 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."
* 12% of these homeowners were able to "catch up" on their delinquent payments and "cured" the foreclosure and kept their homes
* 33% of these foreclosures were "withdrawn" - usually this means that the homeowner was able to sell or refinance the property during the redemption period
Source: The Denver Post, March 7, 2007

Why the unprecedented rise in foreclosures? Most Colorado foreclosures fit the following patterns:

•The home is a low or mid-range priced home
•The owner of the home purchased it with little or no money down (very high risk)
•The owner refinanced the home repeatedly - depleting and spending the equity
•The home may have been refinanced at a loan amount equal to or greater than it's value
•The owner purchased or refinanced the home with an "ARM" adjustable rate mortgage-some
with a very low initial "teaser" interest rate which has steadily gone up
•The home was purchased as a new home directly from a builder who offered 100% financing
and the home has not appreciated in value
•The owner is a first-time homebuyer

The majority of foreclosures are clustered geographically. Adams, Weld and Larimer counties are experiencing explosive growth with hundreds of new homes being built every month. This has created an over-supply of homes in some areas and these are not appreciating or growing in value. Many of the foreclosures are concentrated in new home neighborhoods. Builders are deeply discounting homes to unload their inventories and lower their overhead. This tends to depress values in those areas. On the flip side, counties and towns with prudent zoning and growth permit restrictions are experiencing minimal foreclosures and little to no impact on existing home values.


A Word of Advice About the Foreclosure Process!

You buy a property, take out a mortgage, and promise to pay it back on a schedule of payments. When you don't pay as agreed, you are considered "delinquent" and "in default" on the mortgage. The mortgage lender starts a process called “foreclosure” to force you---the borrower---to either catch up with all money owed OR force the sale of the property (which is the collateral for the mortgage).

If you---or someone you know---find yourself in this place DO NOT STICK YOUR HEAD IN THE SAND AND DO NOTHING!! Many mortgage holders are willing to work with the borrower and will negotiate a "Forbearance" or "Short Pay" agreement. This postpones the foreclosure process and allows the struggling homeowner some breathing room. This is a great time to call me - your trusted real estate advisor!! I can help you explore your options.

There are FREE local foreclosure hotlines which give valuable guidance and assistance. Note: Over 50% of homeowners who call a hotline are able to avoid foreclosure!

877-601-HOPE Colorado Foreclosure Prevention Hotline
888-995-HOPE Homeownership Preservation Foundation Hotline