Foreclosure Creates Records In Denver

July 31st, 2008

Foreclosures are creating records in Denver with over 9,500 postings during the first six months of this year. This calculates to more than 34% since first half of 2005. In terms of foreclosure number this is the worst year. The 1988 record of 17,122 is all set to be broken. In comparison the population growth has not increased. There is all round concern about the number of people affected by foreclosures. The local economy is showing signs of health but there is the danger that foreclosures are going to negatively impact it.

Peter Lansing of Universal Lending stresses that there is no doubt that a crisis is raging. He had been part of a foreclosure task force during the troubled days of 1980’s. He feels an imperative need to do something and adds, “It is all of our responsibility.” Lansing squarely puts the blame on all – lenders, consumers, developers and realtors.The expert opinion is that there are many reasons behind the foreclosure crisis – the increase in the interest rate of adjustable rate mortgages, the loans that required no down payments, the selling of mortgages to people with questionable income and credit records, over construction, lack of new properly paid jobs and fraudulent lending practices. Then there are individual reasons that always play havoc with life – divorce, unemployment, illness and death of an earning member. Need for profits also are a driving force but it is not a major one.

The problem today is not so much about loan types but about the value of the houses. Lansing clarified that a wrong loan in a strong market has a good chance of coming out fine but the wrong loan in a bad market is disastrous with no chance of hope.

Referring to the situation in Denver Tom Clark of Metro Denver Economic Development Corporation comments that here foreclosures are a puzzle because despite the fact that the economy is running well, there are so many foreclosures. It was expected that the end of summer would see the end of the foreclosure mess, but unfortunately numbers have started to rise and this seems to be the trend that will not easily go away.

Tucker Hart Adams, an economist of renown is also gloomy about the future and says that before getting better it will get worse. The question is “how much worse.” Realtor David Binkowski says that most of the foreclosed houses have price tags below $300,000.