Colorado Foreclosures: $15.7 billion loss

Foreclosure activity from 2009 to 2012 is projected to cost Colorado homeowners $15.7 billion in equity, according to a national report released today by the non-profit Center for Responsible Lending.

That ranks Colorado No. 16 of the 50 states and Washington, D.C., which are projected to lose a total of $1.9 trillion in that time period.. Colorado accounts for 8.26 percent of the total loss. California and Florida, projected to lose $627 billion and $331.3 billion, respectively, will account for about half the total loss. New York is projected to lose $242 billion in equity, while Wyoming, a mere $139 million.

Reasonable projections

Ryan McMaken, of the Colorado Division of Housing, who conducts his own foreclosure analysis, said Colorado’s ranking by the group seems to be reasonable.

“On the lost equity question, had Colorado been ranked near the top I would have been skeptical,” McMaken said. “Colorado had among the larger increases up in prices among interior cities during the bubble years, but it certainly never approached the sort of run up in prices that was experienced in Phoenix, Vegas, California and Florida. Colorado’s real estate is naturally going to probably show a greater decline in equity than states like Missouri, Nebraska, Indiana, etc., so Colorado’s probably going to be higher on the list, but it would make sense that Colorado’s not near the top of it.”

Foreclosure epidemic

The group, which compiled a state-by-state summary titled the “Cost of Bad Lending,” projected that Colorado will have a total of 47,400 foreclosures this year. The group said that while lenders outside of the government’s HAMP (Home Affordable Modification Program), have stepped up their efforts to help distressed homeowners, “loan repairs are still dwarfed by the foreclosure epidemic,” across the country. Most Colorado experts say that the vast majority of foreclosures in the Denver area and the state are now being caused by a loss of jobs, while the first wave of foreclosures were due to bad loans. Most of the losses from the subrpime and other toxic loans, however, have now worked their way through the system, according to most local experts.

And McMaken said that 47,000 projection might be over-stating the actual number of foreclosures this year. “It’s possible, but I’ll be surprised if it gets that high,” McMaken said. “I expect a lower number for this year, about 41,000 to 44,000, compared to last year’s 46,000.”

Sales under-counted

The center also projected 140,223 foreclosures from 2009 to 2012, which McMaken said could be a reasonable estimate. The group, however, said there were 27,003 foreclosures sales from the first quarter of 2008 through the third quarter of 2009, but McMaken said there were actually about 35,000 during that time period.

The report also said that the average loss per home affected by a foreclosure was $9,950. It is projecting 1400,223 foreclosures from 2009 through 2012. It also said that 91,980 mortgages are past due in Colorado.