| 1/10/2007 9:08:00 AM | Email this article • Print this article | Foreclosures skyrocket
One in every 152 pieces of commercial and residential property the county foreclosed in 2006
The number of filings for foreclosure in Chaffee County increased 57 percent from 2005 to 2006, representing one foreclosure for every 152 pieces of commercial and residential property.
In 2006, 60 parties began the process of filing for foreclosure compared to 38 in 2005, Diana Wood, Chaffee County Treasurer and Public Trustee, said.
The increase comes after a 17 percent decrease in filings in 2005 from 46 in 2004, she said. Foreclosure filings in 2006 were the highest since there were 63 in 1988.
Increases in foreclosures aren't unique to Chaffee County. Colorado was ranked No. 1 in the country for foreclosure rates for eight of the first 11 months of 2006, according to RealtyTrac, the largest publisher of foreclosure and pre-foreclosure properties.
Weld County, specifically the Greeley area, had the highest foreclosure rate of the nation's 200-plus most populous urban areas, RealtyTrac reported.
The increase in foreclosures doesn't necessarily mean it's a bad time to purchase property as long as the borrower makes informed decisions, Kim Anderson, mortgage loan officer at High Country Bank, said.
Many foreclosures in the metro area are a result of risky adjustable rate mortgages, she said, and when the adjustable rate increased, monthly payments doubled in some cases.
Although the situation is different for everyone, the upswing in foreclosures could be due to a burden of debt load, job loss or medical expenses creating an unforeseen change in circumstances, Art Gentile, senior vice president at Collegiate Peaks Bank, said.
By and large, loans won't be approved if lending institutions don't believe the potential borrower will be able to repay the loan, Gentile said.
Taking out a loan requires a conscious decision by borrowers who must know if they can afford the monthly payment without crimping their lifestyle - they must know they can still afford necessities like food and heat, he said.
County Court Judge William Alderton told The Mountain Mail in December there was a noticeable increase in collection cases on his civil docket in 2005, indicating the difficulty in making ends meet isn't limited to mortgages.
There are two ways lending institutions can file for foreclosure in Colorado - judicial foreclosure and non-judicial foreclosure, according to RealtyTrac.
Judicial foreclosure occurs less often than non-judicial foreclosure. The process is used when there is not a power of sale clause in the mortgage or deed of trust.
A power of sale clause authorizes sale of the property to pay off the balance of the loan if the borrower goes into default.
Judicial foreclosures, as the name implies, occur in court while non-judicial foreclosures go through the public trustee.
Although lenders can stand to profit from a foreclosure, it's a time consuming process to which no lender looks forward, Gentile said.
In addition to taking an extended time, lending institutions must market foreclosed properties and are faced with whims of the market like anyone else selling a home, he said.
If the lending institution is unable to collect the total value of the original loan, the former owner can be sued for the balance, Gentile said.
On the flip side, if market value of the home has increased since the mortgage was issued, it's possible for the lending institution to make money during the process.
There are businesses and individuals who can benefit from foreclosures. After a property is foreclosed, cleaning crews prepare the building for sale.
Television advertisements often tout buying foreclosures because they can be purchased for drastically reduced prices - a benefit to homebuyers.
Sandy Hoard, a broker associate with Remax Mountain Vista Properties, said although buyers can sometimes benefit from foreclosures, it might not be as much benefit as commercials suggest.
Often foreclosed properties do sell for less than market value, but it's not always the case, she said. Homes with a lower price tag might also come with a significant amount of work.
Such properties can be a good deal, but it's important for buyers to understand what they are doing, making a Realtor beneficial in the buying process, she said.
In this area, lending institutions often market foreclosed properties through realtors, she said.
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