Foreclosures rip neighborhoods
http://www.rockymountainnews.com/drmn/real_estate/article/0,1299,DRMN_414_5352848,00.html
Record metro rate takes a heavy toll in northeast, southwest
Dennis Schroeder © The Rocky
February 15, 2007
Foreclosures in Denver since 2003 will log a fivefold increase by the end of the year, a trend that is tearing apart neighborhoods throughout the city.
A new city-funded report that tracked the swelling number of foreclosed homes found that once a neighborhood has several foreclosures, it quickly multiplies. That's just the start of the problems, which now are threatening the social and physical fabric of entire neighborhoods.
Vacant and abandoned houses drive down surrounding property values, hurting schools that depend on property taxes and can attract transients and criminals.
Neighborhood complaints about yards overgrown with weeds and filled with trash correlate exactly with areas plagued by foreclosures.
And nowhere is the impact of foreclosures more evident than in northeast Denver.
"I would say on some blocks, but not every block, in Montbello, 25 percent of the homes are in foreclosure," said -Realtor Phil Heter, who specializes in selling foreclosed homes.
"The same thing happened to Montbello in the '80s, with all of the HUD foreclosures."
Heter has about 120 distressed properties to sell, double what he had a year ago.
On one block in northeast Denver's Montbello, he has three homes he is selling for a lender, and other brokers are listing a few more across the street.
The 22-page Foreclosures in Denver was prepared by the Denver Office of Economic Development and the Division of Housing and Neighborhood Development.
The Foreclosure Task Force - created a month ago by Denver City Council President Michael Hancock - will have its fourth meeting today. It will look at some of the findings and specific recommendations in the report and try to find solutions to combat the record number of foreclosures in the city.
In 2006, a record 19,425 real estate foreclosures were filed in the seven-county Denver area. That's up from about 9,000 in 2003. The state has led the nation in the number of foreclosed homes for most of the past year.
It was important to confirm where foreclosures are concentrated, said Jacky Morales-Ferrand, director of Housing and Neighborhood Development Services for the city of Denver.
"We can use this information to better target areas with our limited resources," Morales-Ferrand said.
Also, by pinpointing where the foreclosures are occurring, "it helps heighten the awareness in neighborhoods."
Realtors Carolin Sandberg and Sarah Hayes are in the process of selling a house in Green Valley Ranch in a short-sale.
For this type of sale, the property doesn't go through the entire foreclosure process, even though the borrower is behind on mortgage payments. Instead, the lender accepts less than the amount of the loan.
The loan is for about $170,000, but Sandberg and Hayes are listing it for about $165,000. The bank is paying the closing costs, legal fees and commissions, and the move to an apartment for the family.
"A lot of people think the banks are being mean to them, but they don't want to own the real estate," Sandberg said.
Hancock, whose district includes Green Valley Ranch and Montbello, would like to create a plan for dealing with the problem.
"I hope to identify, in the next few weeks, initiatives to help bring Montbello back," Hancock said. "I have been approached by some investors who think they can really help. If you look at the housing stock in Montbello, it is full of all-brick ranches where anyone would want to live."
He also said if the city discovers it has banking relationships with lenders who are making "predatory loans" that are fueling foreclosures, it will park its money elsewhere.
City Councilman Rick Garcia, who is co-chairman of the Foreclosure Task Force, said questionable loans are to blame.
"It does appear that the growing number of foreclosures, in part, are being driven by folks who got involved perhaps in riskier mortgage products than they understood," Garcia said.
Glad I avoid sub prime and have totally avoided first mortgage products with pre-payment penalties and negative amortization.:icon_idea:
