Colorado Foreclosures Slowing Down

Posted in Foreclosures, November 9th, 2007 |

A piece of good news at last – Colorado foreclosure numbers are deceasing. It dropped by 45% from January to October this year as compared to what it was during the same time in 2006. Of the top nine states in the foreclosure race this was the biggest percentage drop.

Colorado registered 10.4 REO listings per 1,000 houses during the first 10 months of the current year. It was 18.9 listings per 1,000 units during the same months a year ago. Ryan McMaken of Colorado Division of Housing is all smiles with the good news – if it is true!

Another report from the same group releasing the information says that there were 16,693 REOs in Colorado during the first ten months of this year. Roughly REOs are similar to foreclosure sales. Last year the auction sales in this region were 13,643. If the comparison is now made with 2006 (12 months) the statistics will show an increase of 22% - which is not good news.

A Real Estate Owned (REO) is a property that returns to the lender after not being sold at a foreclosure auction. In the current mood of the market often there are no bids at the auction. Had there been sufficient equity in the property the owner would have sold it long ago and paid off the bank. Because there is nothing left after meeting dues, the unit ends up with foreclosure or trustee sale. The sale begins with a minimum bid that includes all pending dues – loan amount, taxes, fees etc. The successful bidder gets the property on an a- is-where-is basis, which might include occupants also. The unsold property now reverts to the lender and becomes REO. This means that the mortgage now no longer exists. The bank will evict the occupants, do repairs, pay taxes and association dues. One who purchases an REO unit will get a title insurance policy and the chance to check on the unit physically. It might turn out to be a great bargain.

The sub-prime crisis leading to foreclosures has led to a situation that moneylenders like banks and other financial groups have overnight become landlords – a position they are not comfortable with. The sheer numbers of foreclosed units have upset all calculations. It is even difficult to come to conclusion with such confusing figures. So we revert to the question – is there cause to smile about Colorado figures?