Foreclosures Rising In Denver

May 8th, 2008 | Tags: Foreclosures

According to a report from the Office of Economic Development foreclosures are rising in Denver. More mortgages are tumbling down to foreclosures. Previously in 1984 the age of the loans was 7.4 years. But in 2005 it dropped to 2.5 years. The report is trying to understand from these facts and figures the basic cause for these innumerable foreclosures.

In Denver foreclosures have risen to 5.9% in 2007 from 0.8% in 2000. It is definitely a cause for alarm. The OED studied the data collected from the office of Denver Public Trust from 2001 to 2007. These were then matched with home mortgage figures.

According to the OED survey 6.6% of the annual Denver loans became delinquent to enter foreclosures within 5 years. The pace of loans defaulting and slipping into the foreclosure net is much faster than before. 83% of the recent foreclosure posting emanated from loans that had started less than three years ago. From 2006 to 2007, 56.6% of the foreclosures occurred because of the borrower losing the foreclosed house in a trustee sale. In this way 2,686 houses in 2006 and 4,191 units in 2007 were lost. The highest concentration of foreclosures is in northeast and southwest regions of Denver. Loans contracted by Afro-Americans and American Indians have been most vulnerable to foreclosures in comparison to those taken by others. The economy is not largely to blame for the debacle. The blame lies with the wrong handling of the sub-prime mortgages.

The study ends with certain positive recommendations. There is need not to think upon house ownership as a risk free investment. Mortgage brokers through the media have sold this idea to the community. This led to doubling of real estate prices during the late 1990’s. Sometimes no down payment was required to get a loan and move into a house. Houses began to be looked upon not as places to set up homes but for investment and quick profits. The report has also advised the setting up of a taskforce all across the city to bring about coordination in the operations of the different agencies providing counseling and help. The creation of a loan pool is recommended to help the defaulters who have stumbled because of temporary personal problems like illness or unemployment. Since all are at the receiving end from the lashing of foreclosure waves, immediate effective action is the call of the hour.