Fewer people lose homes to foreclosure, but ...
by Sharon Dunn
House Bill 1276, the Foreclosure Delay act, gives homeowners and their lenders 90 days to avoid foreclosure by working with certified mortgage counselors to regain their financial footing.
Gov. Bill Ritter is due to sign the bill by June 5, and it will be effective July 1.
According to the bill, within 20 days of notice of foreclosure, the borrower must contact a HUD-certified counselor such as those at the Foreclosure Hotline at (877) 601-HOPE. The counselor will assess the person’s debt and financial situation. If the homeowner is deemed a good candidate, he/she gets an extra 90 days to work with the bank to figure out how, if at all possible, to stay in the home, according to a Colorado legislative staff review of the bill.
If a loan holder receives notice that a borrower is eligible for a loan deferment, the loan holder must defer the foreclosure for 90 days, during which time the borrower must make payments equal to two-thirds of the monthly payment due prior to delinquency, plus one-12th of the annual amount due for taxes and insurance.
The bill states the 90-day delay would only be available through July 2011.
The bill was sponsored by Rep. Mark Ferrandino, D-Denver.
The number of people losing their homes to foreclosures in Weld County has gradually dropped since last spring, but that trend may soon come to an abrupt end.
The first quarter of the year saw a 21 percent decrease in foreclosure sales in Weld County and a 26 percent drop statewide, compared to the first quarter in 2008. But it also was the time when Fannie Mae and Freddie Mac put a moratorium on foreclosures. That ended March 31, and in April, Weld saw its biggest single-month bump of foreclosure filings in history at 300.
There are still some adjustable rate mortgages “adjusting,” but many people are now losing their homes because of newfound unemployment, officials say.
“You have an interesting situation where people are unemployed or underemployed, and oftentimes the payment is going up, and they have negative equity,” said Matt Revitte, a broker with ProRealty, 806 8th St. in Greeley, who markets foreclosed properties. “There are just not a whole lot of options out there. It’s an interesting set of circumstances we’re dealing with now.”
More foreclosures may be coming now that the Legislature has passed House Bill 1276, which would delay foreclosures for 90 days to allow borrowers time to work out their financial hardships. Gov. Bill Ritter plans to sign the bill before June 5, according to his spokesman, Evan Dreyer.
Consequently, second-quarter foreclosures may go through the roof.
“When lenders see we passed 1276, they’re going to try to jam as many foreclosures through before that bill goes into effect,” said Ron Woodcock, of Remax Southeast in Denver, who participated in a conference call Monday to discuss first-quarter foreclosures. “My list has jumped up to 900-1,000 per week, just last week.”
Initially, foreclosures numbers look promising for Weld County and the rest of the state. The first quarter, or the first three months of the year, show Weld foreclosure sales dipped 21 percent from the same time last year and filings dropped 5 percent. In Larimer County, foreclosure sales dropped 24 percent but filings grew by 10 percent.
The first quarter’s declines mark the largest year-over-year decreases in completed foreclosures since [CDH] began collecting data in 2006, according to a prepared release.
“The trend you’ll find is that over the last three quarters, completed foreclosures have been declining, but it is the third quarter of increases in new foreclosure filings,” said Ryan McMaken of the [CDH] in the conference call.
There are more filings than actual sales because borrowers have up to four months to cure their bad loans. Housing officials say the Colorado Foreclosure Hotline also shares some responsibility for driving down actual foreclosure sales.
The Colorado Foreclosure Hotline — (877) 601-HOPE — has been in place for more than two years, and according to Hotline records, almost 10,000 households have been able to avoid foreclosure.
A big portion of homeowners avoiding foreclosures is unloading their homes on the market through short sales, or selling the home for less than it’s worth.
Billie Jo Downing, with Remax Action Brokers in Loveland and a founding member of the Foreclosure Prevention Task Force in northern Colorado, said 40 percent to 60 percent of the market now is from either bank-owned properties or short sales.
Weld’s foreclosure rate is one foreclosure sale for every 245 households.