“Volumes are increasing in resort communities”
The number of foreclosures being reported across Gunnison County continues to outpace years past, with 130 foreclosures started already this year, on homes running the gamut in location and value.
By this time last year, there were 117 foreclosures started in Gunnison County, which was more than the county had seen in all of 2007 when the aptly dubbed ‘mortgage-crisis’ was hitting a crescendo in the state’s Front Range cities. Now, Crested Butte attorney Aaron Huckstep is seeing the brunt of the foreclosure crisis hitting mountain and rural communities across the Western Slope.
In 2009, a total of 183 foreclosures were started in the county, breaking the previous record of 132 set in 1987. And just four years ago, the number of foreclosures being pursued in the county was only 10, an all-time low since records started being kept in 1983.
In addition the number of people losing their homes locally continues to rise. In the first quarter of this year, Gunnison County outpaced a majority of counties on the Western Slope in the percentage of homes completing foreclosure, with nearly a half-percent of the home-owning population consistently unable to make payments.
The only other Western Slope county to have more households in foreclosure by percentage was Grand County, with .77 percent.
“Volumes are increasing in resort communities,” says Huckstep, who counsels people facing the prospect of foreclosure. “San Miguel, in the last six to eight months, is seeing foreclosure activity increasing over there. We’re seeing it across the state, helping people down in Mancos, Pagosa Springs, and Telluride, even in Montrose County. Rural communities are struggling because it’s hard to make a living in those communities.”
Nationwide, he says, the rate of mortgages at least 60-days delinquent (a key indicator of foreclosure volumes) is continuing to rise, as well.
While part of the explanation to the ongoing escalation in foreclosures might be a waning job market, some federal programs developed to ease the crisis might now be slowing the recovery also.
Part of the federal Making Home Affordable campaign, the Home Affordable Modification Program, was introduced in March 2009 as a way to help people who had an income but couldn’t pay their mortgage on time reduce their monthly payments. Participating lenders would take a few weeks to evaluate a borrower’s finances before making a determination about their eligibility for the program.
“We are seeing a continued heavy pace of foreclosures,” Huckstep says. “That seems to be driven partly by borrowers’ frustration the with federal mortgage modification program. We’re seeing people who have been in the trial period for several months and then the lender denied the modifications. Obtaining a modification is more the exception than the rule.”
Huckstep has seen situations where a person is waiting for the details of the loan modification to come through at the same time they are falling behind on their payments and moving closer to foreclosure. Sometimes the foreclosure happens while the modification is in the process.
“Generally [the lender] will delay the foreclosure. But in other cases the lender has denied a modification because [the borrower] hasn’t supported their income. When that happens, borrowers end up frustrated and without an option other than foreclosure. “[The lenders] are supposed to give a thumbs up or down within three months on permanent modification and that’s not happening in reasonable timeframe,” he continues. “One person last week told me that he had been waiting for 18 months.”
That isn’t helping homeowners stay out of foreclosure or keeping houses off the market. But unlike recent years, the number of houses being bought at auctions is also on the rise.
Despite more than 41 homes going into foreclosure in the first quarter of 2009, only 10 were bought at auction. All year, 73 foreclosed properties sold. In the first quarter of this year, 33 homes have been sold at auction.
And while not all of the households that start foreclosure proceedings end up going to auction, more of those that do finish foreclosure are being picked up, even though they are staying on the market a month or more longer than they would have last year.
Huckstep says, “Anecdotally, we are seeing the banks price foreclosed properties aggressively and they’re turning quickly.”
The Colorado Department of Local Affairs (DOLA) attributes foreclosure rates in mountain counties to foreclosures on second homes and time-shares. But county treasurer Melody Marks isn’t able to identify any pattern or epicenter for the foreclosure boom in Gunnison County, because the geographic information hasn’t been tracked yet this year. She said, however, that homes in all price ranges and in parts of the county are starting foreclosure.
There was a modest increase in the number of foreclosures filed between the last quarter of 2009 and the first quarter of 2010, from 41 to 44 or about one foreclosure for every 189 occupied homes.
And DOLA isn’t painting a rosy picture for the future. According to their first quarter analysis, “foreclosure activity is not expected to increase significantly but it is not expected to drop off significantly either. Continued weakness in the job market and in personal income growth will continue to contribute to mortgage delinquencies and defaults.”
“Lots of people [don’t know the risks of foreclosure]. While the basic types of risks remain the same, the probability of those risks – especially associated with ongoing liability for a “deficiency” – are changing every day,” Huckstep says. “A year ago, if you had a foreclosure the risk that your lender would pursue you for deficiency right away was pretty low, but that is on the rise. The circumstances surrounding foreclosure are changing as time goes on.”
People struggling with the prospect, or reality, of foreclosure can call Aaron J. Huckstep at 349-5363, the Colorado Foreclosure hotline for free professional assistance at 877-601-HOPE or the Gunnison County Housing Authority at 641-7900.