Foreclosures in Colorado

Foreclosure filings in Colorado are higher over the past month and year. Foreclosure filings are the first step lenders must take on the path to removing a borrower from a home for missing mortgage payments. In recent interviews, local real estate, mortgage, and housing experts said the increasing foreclosure filings are the result of a confluence of factors, from a boom in risky, subprime loans issued over the past few years to the recently slumping housing market and increased utility prices.

Foreclosure Market Report, which shows a total of 925,986 foreclosure filings — default notices, auction sale notices and bank repossessions — were reported on 573,397 properties nationwide during the first six months of the year, up more than 30 percent from the previous six-month period and up more than 55 percent from the first six months of 2006. Foreclosure filings do not always result in a person losing a house at auction. Foreclosures rose sharply in the first quarter of the year as housing prices stalled and homeowners had an increasingly difficult time making their mortgage payments.

The argument against mortgage brokers is that they intentionally steered borrowers towards loans they couldn't afford. Mortgage lenders sent 2,148 notices of default to property owners in the first quarter, up from 1,607 in the fourth quarter, and 1,307 in the first quarter of 2005, according to DataQuick. Many foreclosures are related to homeowners with adjustable-rate mortgages who are beginning to realize what hit them, he said. Owners can stop foreclosures in several ways, including selling their houses to pay off the mortgage, refinancing, filing for bankruptcy or trying to make back payments.

Homeowners often sell or come up with money to save their houses, sometimes at the last minute. Homeowners are being put in a squeeze and will have greater difficulty selling their way out of trouble through conventional channels. Homeowners who find themselves in danger of missing a payment should contact their lender to let them know and work out a plan, if possible. The Fair Housing Center's response to this challenge has been to start a predatory lending remediation program, Restoring the Dream, to help homeowners retain their homes and reduce their mortgage payments. Consistent with the growing number of mortgage defaults nationwide, a mix of rising interest rates and a softening housing market, along with the collapse of the subprime mortgage market, have forced many more homeowners into foreclosure.

Subprime lenders tend to be less regulated than their prime counterparts. Subprime and other “exotic” loans, as they are commonly called, are often attractive because they require little money down and can help people purchase a house for which they might not otherwise qualify. Subprime mortgage providers are also tightening their standards, eliminating refinancing options for troubled homeowners. Subprime loans are made to people with less-than-attractive credit. Another problem is subprime loans, those that require little money down but can come with high interest rates.

Foreclosure filings are up 35 percent nationwide since a year ago, according to RealtyTrac. RealtyTrac, an online marketplace for foreclosure properties, says that nationwide foreclosure filings are up 42 percent from 2005, with the highest rates posted by Colorado, Georgia and Nevada.