Foreclosures are a hot topic these days. Some people say Colorado is #1 in foreclosures, others say it's not 
so! Who do we believe and why?
The Denver Business Journal featured a good story on this very topic, "Is Colorado really worst in foreclosures?" The answer to this question is, "It Depends who you ask!"
Who Keeps the Stats on Foreclosures?
There are three sources on Colorado foreclosure statistics. What is surprising is none of them agree! RealtyTrac out of Irvine, California has given Colorado the dubious distinction of being the #1 State for foreclosures for 8 months straight! The folks at the Mortgage Bankers Association (MBA) puts Colorado in 13th place -- behind 11 states and Puerto Rico -- in the percentage of total loans in foreclosure as of June 30. And Colorado ranked eighth in foreclosure sales as a percentage of total home sales during the first half of 2006, according to a report published November 16 by First American Real Estate Solutions of Santa Ana, California.
Why Aren't The Numbers Consistent Among Researchers?
Colorado officials all agree our number of foreclosures are significant. They also agree on the fact there is no set standard for measuring the number of foreclosures, so the numbers are not necessarily correct.
"We are the only public-trustee system in the country; all the other 49 states do something different," said Boulder County Public Trustee Sandy Hume. "There are hybrid-type situations out there where you have sheriff's sales and sheriffs functioning in a public setting as a governmental officer, but in other states you have a private company managing foreclosure. A private trustee has no public responsibility to report anything."
"I have no proof either way, but viscerally I think that the fact that we're the only public-trustee state in the nation may be --underscore 'may be' -- altering the numbers in our disfavor in terms of displaying higher rates." Hume said.
The Public Trustee system in Colorado reports foreclosures on day one. In other states a report may not occur until elsewhere on the time line; day one, midway or when the property is completely foreclosed.
Last year 32% of the 22,894 reported foreclosures were later withdrawn, according to the Colorado County Treasurers' Association. Withdrawing a foreclosure means the homeowner found a way to pay off the mortgage or refinance the loan. During this process in Colorado the lender may agree to assist the seller by providing a "short sale" to avoid the high cost of foreclosure.
Another factor that is seldom discussed, Colorado's home ownership rate is above the national average. Nationally the average is 68.9%, Colorado has a home ownership rate of 71% This higher rate of home ownership puts Colorado in a riskier position than states with a lesser homeownership rate.
Comparing apples to oranges makes lemons. It's not good, but it's not nearly as bad as some would like it to be.
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The comment about the public-trustee reporting is true. Most Western states use a "notice of default" which "initiates" foreclosure. The foreclosure process isn't reported until the sale. This skews the numbers.
Our Sunday paper (Columbus Dispatch) said Ohio was number one in foreclosures according to the Mortgage Bankers Association, I tried to verify the stat and could not.
I say give the title to Colorado....
Brian ~ we really "jump the gun" on reporting, I beleive that is hurting the stats...for sure.
MM ~ I say let the Buckeye State have the honor. We can at least pass it around, from state to state, like a HOT TROPHY...
In Dena's Colorado trivia blog, she mentioned that Colorado had more micro brewers per capita than any other state. Maybe there's a connection between that and foreclosures? Must be something in the hops!
Frosty mugs aside, this is an excellent illustration of how important it is to take statistics within the proper context and to be very careful about trusting the 'experts' and their 'reports'.
Thank you Kristal - I have been wondering which "stats" to trust, as I keep running into the same issue... there does not seem to be a standard way of ranking "foreclosures" - are they in the process, sold, redeemed ...? You bring up some great points!
... so where do "gooseberries" come into play, with your oranges, apples and lemons?
Now this is a really excellent and informative post! I'm grateful you took the time to detail the issue and at least one potential solution. Thanks for the post!
Obtaining accurate statistics on foreclosures is a bit difficult. The causes of foreclosures are even more difficult. Many of the sources for this information seem to color their stats according to their agenda.
Jay Merton
Aha John, I think you're onto something here; but I thought Oregon held the honor of most microbrews? Has Colorful Colorado surpassed the Beaver State!
Kristal,
Thanks for uncovering this data. Just to add some of my opinion on the subject: Whether we are first or thirteenth, we know the number is large and we have some time ahead to work through them. Some are predicting the increase in interest rates will impact those with adjustable rates. The bad news is there have been a large number of people who have taken on loans with terms that did not fit their circumstances and consequently ended up in an undesirable position. If we can find a postive side to the foreclosures it is that there are a number of properties on the market that can be purchased for better prices by first time homebuyers who otherwise would be priced out of the market.
If everyone stopped skiing and drinking microbrews, maybe there would stop being so many foreclosures! I sincerely doubt it unfortunately since some people may have bitten off more than they can chew.
KK... my reports say all 50 states are #1. How about them apples.... lol
Seriously...as Brian mention, because of this, they can skew numbers. It's sad, because they do give Denver a bad rap. Then again, do they count Igloos in the Denver mountains that foreclose? lol
Media can stick their nose in this also.... and skew facts.