State bounces back from bust
La Plata County foreclosures hit 30-year high; still lower than state average

SideStory: Opening the door to Durangoans : City Council passes inclusionary zoning ordinance

A for sale sign graces a yard along East Third Avenue this week. Strong housing markets like Durango’s have been traditionally insulated from national downturns, with homewoners who fall on hard times able to find buyers. However, local residents are not immune, with foreclosure rates in La Plata County at a 30-year high. Despite this, the rate here is still relatively low compared to Front Range counties, some of which see as many as one out of every 58 homes in foreclosure./Photo by David Halterman

by Missy Votel

More Coloradans will be staying in their homes for the holidays this year, as foreclosures rates across the state drop.

A report released late last week by the Colorado Department of Local Affairs Division of Housing found there were 14 percent fewer completed foreclosures in 2008 through September than during the same period of 2007. The department’s latest numbers show that for the third quarter of 2008 (July 1- Sept. 30), there were 9 percent fewer completed foreclosures than third quarter ’07.

There were 6,454 new completed foreclosures during the third quarter of 2008, bringing the Colorado total for the first three quarters of the year to 16,246. There were 19,025 completed foreclosures during the same period last year, and 25,320 foreclosures during the full year of 2007 – a 40 percent increase over 2006. The Division’s report predicts a decrease of 13 percent for foreclosures by the end of 2008.

“2006 and 2007 saw big increases in foreclosure filings of 30 and 40 percent, so a 14 percent decrease so far this year makes us cautiously optimistic about the future,” said Kathi Williams, director of the Colorado Division of Housing. “There are still many reasons for concern, but this is good news.”

Despite this, foreclosure rates in La Plata County are at their highest point in 30 years, with 132 filed in 2008 as of Monday. La Plata County also bucked the statewide trend with 2008 besting 2007 – which had 74 filings in the same time period – a nearly 18 percent margin.

“I think foreclosure activity will continue as long as we see national economic trends bleed into our markets here,” said La Plata County Treasurer Ed Murray, whose office tracks foreclosures.

Murray said 2008’s numbers could end up higher than those in 1987, the first year he was in office, when there were 149 filings. However, he cautioned against reading too much doom and gloom into the local numbers. Although 132 foreclosures have been filed, 42 were withdrawn with only 23 so far having gone to sale (compared to 20 total in 2007). One reason for this could be the increase in willingness on the part of lenders to work with borrowers whose accounts have fallen into arrears.

“Lenders are working more with borrowers to restructure their loans and keep their homes,” he said.

The Division of Housing report reached the same conclusion. Foreclosure filings rose 3 percent during the first nine months of 2008 compared to 2007, actual foreclosure sales dropped.

Murray also noted that while rates in La Plata County are climbing, they are still low compared to other counties in the state. In recent years, the Front Range and Eastern Plains counties of Weld, Denver and Adams have experienced some of the highest rates of foreclosures in the state. “Percentage wise, we’re not nearly as high compared to other counties in the state,” he said.

Murray said some reasons for La Plata County’s relatively low rate are high property values and financially better-off borrowers. “Traditionally, property values have been higher here. If people did get in trouble, all they had to do was put their house on the market,” he said.

Furthermore, since home prices tend to be higher here, buyers often are subject to more scrutiny during the lending process and must pay higher down payments. “I think we may have better qualified borrowers to begin with.”

According to the Division of Housing report, La Plata County had 1 completed foreclosure for every 992 households thus far in 2008. In contrast, even as growth rates moderate in many areas, high foreclosure rates persist. The highest rate was in Adams County, where there was 1 foreclosure for every 58 households. In Denver County, there was 1 filing for every 73 households; 1 for every 74 households in Weld County; and one for every 102 households in Pueblo County.

Meanwhile, there are several other counties in a similar situation as La Plata, with rising foreclosures despite the state’s downward trend. In year-over-year comparisons between the third quarters of 2007 and 2008, Boulder, Broomfield, Douglas, El Paso, Jefferson and Larimer counties all reported increases. El Paso topped the list with a 26 percent increase.

On the other hand, Denver County reported the largest decrease, with a decline of 26 percent compared to the third quarter of last year. Adams County reported a 19 percent drop, and Weld County reported a 20 percent drop.

One reason being cited for the drop is the creation last year of the Colorado Foreclosure Hotline (1-877-601-HOPE). In 2008, almost 4,000 households avoided foreclosure through the hotline and its member agencies, according to the report. “If those 4,000 households had foreclosed, we’d be looking at an increase instead of a decrease in foreclosures,” said Williams.

However, changes in Colorado law also played a role in skewing the numbers, according to the report. One law, which took effect Jan. 1, created a transitional period during March and April whereby lawyers were required to give 30 days’ notice to mortgage defaultors before proceeding with foreclosure. This helped drive down totals in the first and second quarter, affecting annual statistics and creating an impression of fewer defaults. Furthermore, a new moratorium in August for Freddie Mac and Fannie May also affected foreclosure filing statistics in similar ways.

“The delays in filing don’t necessarily clear up the problem or guarantee it’s not going to happen,” said Treasurer Murray. “It’s just the reality of the world, things happen – divorce, illness, being out of work. There are a number of valid reasons people may be unable to pay their mortgage.”

On Nov. 13, RealtyTrac Inc., an online database of foreclosure home sales, reported that Colorado had the fifth-highest foreclosure rate in the nation in October, up from 10th in September.

The Colorado Division of Housing collects foreclosure data from public trustees on a quarterly basis. The report, and past foreclosure reports, can be accessed online at the Colorado Division of Housing Web Site at



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