Foreclosure filings up dramatically
by Catherine Lutz, Aspen Daily News Staff Writer
Monday, March 15, 2010
Expert: Locals in resort areas getting hit hard
Foreclosure filings in Pitkin County are more than triple what they were in early March last year, mirroring a disturbing trend in which experts are seeing rural resort regions getting hit harder later in the economic downturn.
There have been 22 foreclosure filings so far in Pitkin County in 2010, compared to six at the same time last year, according to treasurer’s office records.
Delinquent amounts range from under $100,000 to $1.5 million, and there doesn’t seem to be any rhyme or reason to the types of foreclosures being filed, said Tiffany Wancura, chief deputy public trustee for Pitkin County.
“They’re all over the place,” said Wancura. “They just keep coming in.”
A scan of the foreclosures list shows that mostly individuals and couples are affected, as opposed to LLCs, which tend to own commercial properties and oftentimes more expensive, second homes.
Pitkin County saw a total of 105 foreclosure filings in 2009, out of which 20 properties went all the way through to the foreclosure sale. It was the third highest number of foreclosures since 1973. (Records are unavailable before that.) By comparison, 2008 saw 35 foreclosure filings and five completed foreclosures in Pitkin County.
An economist who works for the state government addressed the issue of rising foreclosures recently at the Aspen Board of Realtors’ real estate summit.
Some resort regions saw 40-60 percent foreclosure rates two years ago, said Ryan McMaken, director of community relations for the Colorado Division of Housing. That’s when vacation home owners, initially hit by the economist crisis, were choosing to jettison their timeshares or other investment properties as values plummeted by simply not paying the mortgage. Owner occupants, meanwhile, qualified for a federal foreclosure deferment program, which saved many people from foreclosure sales.
But now, “local owners are losing their jobs or otherwise seeing a decline in income, so over time locals are impacted more and more,” said McMaken, an economist.
In the rural resort regions of Colorado, McMaken said, both new foreclosure filings and completed foreclosures are going up, and in some places are doubling and tripling since last year.
“It’s because places like this got hit later,” he said. “And it adds to the pain lasting.”
Statewide, data is not yet available for 2010. But trends from 2009 show that while foreclosure filings increased — there were 18 percent more in 2009 than in 2008 — foreclosure sales decreased by 4 percent.
These trends indicate that “lenders, borrowers and housing counselors are meeting success in implementing a variety of loss mitigation strategies,” according to a report from the state Department of Local Affairs. “However, the increase in new foreclosure filings indicates that foreclosure activity will continue in Colorado at least through the first half of 2010.”
The DOLA report also notes that “most of the new growth in foreclosure activity is taking place outside of the Denver Metro area.”
Foreclosure filings have risen across Colorado nearly every year since 2003, according to state data, with a big spike in 2007. Filings rose to 39,900 that year, from 28,400 in 2006. They went down just slightly in 2008, to 39,300, but rose again, to 46,400, in 2009.
Foreclosure sales have been decreasing since 2007, when there was a high of 25,000 completed foreclosures.
Both foreclosure filings and sales are roughly triple what they were in 2003.
The largest amount of foreclosure activity last year was taking place on the Front Range, even though some metro counties are seeing the biggest drops in foreclosure sales totals.
Mesa County (home to Grand Junction), on the other hand, saw about 300 percent more foreclosure filings and sales in the fourth quarter of 2009, compared to the same period in 2008 — likely due to the decrease in oil and gas activity. Otherwise, foreclosure rates (number of homes per completed foreclosure) have generally been lower in the mountains and on the Western Slope, according to DOLA.
Pitkin County’s foreclosure rate in 2009 was .3 percent, which translates to 393 households per completed foreclosure, among the lowest in the state. Garfield County had 408 foreclosure filings in 2009, and 82 foreclosure sales. That’s compared to 108 filings and 10 sales in 2008. Still, its 2009 foreclosure rate was .4 percent, compared to the state average of 1.1 percent.
Locally, it’s unknown how many of the foreclosure filings will translate into sales at auction. The first scheduled foreclosure sale of the 2010 filings in Pitkin County is May 12.
Meanwhile, banks that have been acquiring more and more property due to foreclosures are doing everything they can to avoid future foreclosure sales.
If a foreclosure sale goes through, there are additional costs to the bank, including legal fees, property taxes and the time spent by staff, said Scott Gordon, president of Alpine Bank Aspen.
“The bills add up pretty quick,” said Gordon.
Gordon also pointed out that property values have been low recently, and while the bank may prefer to hold the property for a couple years in hopes of better recouping costs when the market goes up, federal regulators want them to sell it sooner rather than later.
“We’re not in the business of buying and selling real estate; that’s not apart of our core business model,” he said.
Gordon said that it’s to everyone’s advantage to try to negotiate avoiding a foreclosure sale.
“Strategically the best thing you can do is to find what the borrower and the bank can work out,” he said. “If you have some level of income coming in, the last thing you want to do is not have a conversation with your bank.”
Wednesday, March 17, 2010
My talk in Aspen
I was recently on an economics panel at the Aspen Board of Realtors' Economic Summit. The Aspen Daily news did a write-up.