Colorado's foreclosure flip

Only five states are in better shape than Colorado when it comes to foreclosures and other distressed properties, according to a recently released report.

Colorado, especially in the Denver area, was one of the first states to be hit by the foreclosure crisis, while other states such as California, Arizona, Florida and Nevada were still enjoying the boom part of the real estate cycle, before the bubble burst.

By every measure – percentage of loans that are delinquent, percentage of home loans in default and mortgages that are not-current – Colorado is in far better shape than those once high-flying states, as well as the entire U.S., shows the July “Mortgage Monitor” report by Lender Processing Services Inc. The Jacksonville, Fla. company tracks data on about 40 million loans nationwide.

Bleeding is slowing

“Compared with the national average, it seems like the bleeding in Colorado is slowing,” said Jason Miller, owner of Milan Realty.

The LPS report shows 5.4 percent of the loans in Colorado are delinquent, 35 percent lower than the national average of 8.34 percent. Mississippi had the highest delinquency rate at 14.6 percent, followed by Nevada at 10.6 percent.

In Colorado, only 1.8 percent of the loans constituted what LPS describes as the “foreclosure pre-sale inventory rate.” That is 56 percent lower than the national average of 4.1 percent.

Florida had the highest percentage of loans in foreclosure, at 13.8 percent. Florida also was the only state in the country that had more foreclosures than delinquent loans. Its delinquency rate was 9.1 percent.

Colorado was in much better shape than the nation as a whole as far as non-current loans. In Colorado, 7.1 percent of the loans weren’t current, which is 43 percent lower than the national average of 12.45 percent.

Florida led the nation in that category, with 22.9 percent of the loans not being current.

Only Montana, Wyoming, Arkansas, South Dakota and North Dakota, were in better shape than Colorado. North Dakota had the lowest percentage of delinquent loans at 3.5 percent. All of those states have much lower populations than Colorado.

Market not yet healthy

Although Colorado is doing well in relation to the vast majority of the country, it still is burdened with too many distressed properties, said Milan Realty’s Miller.

“The healing process will take some time,” Miller said. “In order to get back to a “normal” market, we will need to see many more “organic” non-distress sales as a percentage of total sales. Nevertheless, this market is starting to recover slowly.”

Ryan McMaken, spokesman for the Colorado Division of Housing, noted that the LPS’s data is very close to what the Mortgage Bankers Association is reporting.

“Colorado is in the bottom third in both cases,” McMaken said.

Foreclosures lengthy process

For the entire country, LPS had one extremely sobering fact – nationwide, homeowners who are in foreclosure on average have not made a payment in a record 599 days.

LPS did not break down the number of days that borrowers have not made payment on a state-by-state basis.

“The 599-day number is probably higher than what is the case in Colorado,” said McMaken, who prepares his own report on Colorado foreclosure activity.

“I know that, by law, the days for foreclosure can range from 30 days in Texas to more than a year in Florida,” McMaken said. “In practice, these periods are probably longer. Colorado is probably somewhere in the middle. I know that there are certainly cases where a foreclosure can take a couple of years, but since it’s four months by law in this state, and since my data tends to show sales peak 6-9 months after a peak in NEDs (Notice of Election and Demand, the first legal step in a foreclosure), a more typical time period to process a foreclosure is probably around six to nine months, or 180 to 270 days”

Many not dodging foreclosure bullet

The LPS report also noted that nationally only 25 percent of the 30-day delinquencies are first-time delinquencies.

McMaken described that as an “interesting” statistic that infers homeowners who avoided losing their homes in the past, are now again in danger of foreclosure.

“Although not all 30-day delinquencies become foreclosures, of course, it stands to reason that many of the new NEDs we see now are on loans that were in default in the past,” McMaken said. “Those foreclosure cases may have been withdrawn, but they’re now back in foreclosure.”

McMaken also said that foreclosures are not only hitting lower-priced homes.

“It stands to reason that many of the high-risk homeowners who were most prone to job loss and foreclosure have already defaulted at some point since 2009,” McMaken said. “I’ve commented in the past that the new foreclosure filings must include more high-income people and people with better credit scores who just couldn’t keep holding on after 3 years of a bad job market.”

From: John Rebchook at JRCHOOK@gmail.com

For-sale inventories shrink for fourth month in a row

Realtor.com: List prices holding steady or posting gains in two-thirds of markets

By Inman News
Inman News™

Inventories of homes, condos, townhouses and co-ops shrank for the fourth month in a row in August, falling 1.9 percent from July and 19 percent from a year ago, to 2.27 million, according to the latest numbers from Realtor.com.

Among the 146 markets most searched by Realtor.com users, the total number of listings increased from a year ago in only three: Denver, Colo. (up 53.8 percent), El Paso, Texas (up 6.3 percent) and Hartford, Conn. (up 2.2 percent).

Inventories were down by 10 percent or more from a year ago in 118 markets, including declines of nearly 50 percent in Miami, Orlando and Fort Myers.

Shrinking inventories can signal a rise in demand, but may also reflect a slowdown in homes moving through the foreclosure process that restricts the supply of real estate owned (REO) properties.

Areas with high unemployment rates and large numbers of seriously delinquent borrowers could again see inventories swell as lenders put the "robo signing" scandal behind them.

Eleven of the 20 markets with the greatest inventory declines in August were in Florida -- a judicial foreclosure state that's been ground zero in the robo-signing scandal.

The nationwide median list price for single-family homes, condominiums, townhouses and co-ops remained at $189,900 in August, unchanged from June and July and up less than 0.5 percent from a year ago.

Median list price was up by 1 percent or more in 64 of the 146 markets tracked, down in 49, and unchanged in the remaining 33 -- a steady improvement over trends reported in June and July.

Declining inventories can provide support for home prices -- median list prices held steady or were up from a year ago in 15 of the 20 markets experiencing the greatest inventory declines in August. Eight of those markets also made the list of 20 markets experiencing the greatest year-over-year increases in median list price.