Alliance helps homeowners deal with home foreclosure

The Colorado Division of Housing and a private alliance of lenders, Realtors and other sponsors have formed what’s called the Colorado Foreclosure Prevention Task Force to help those facing foreclosure on their homes.

Officials said the task force was formed as part of a partnership between the division and JP Morgan Chase Bank. The task force is co-chaired by Kathi Williams, the housing division’s director, and Debra Bustos, community relations manager of the JP Morgan Chase National Community Relations office.

The group began meeting in October 2005, and members include housing counseling professionals, a representative of the public trustees and several real estate and a financial services professionals. The Boulder County Housing Authority and Boulder County Public Trustee organization also participate.

Better service

It has raised nearly $450,000 to improve counseling services to homeowners facing foreclosure.

This past October it launched a toll-free foreclosure hot line, 1-800-601-HOPE, for those interested in learning more about options in the face of foreclosure.

Ryan McMaken, community relations director with the housing division, said about 9,000 people have called the number since its inception.

McMaken said the hot line may be the first of its kind nationally in terms of serving an entire state and leveraging technology to route calls by ZIP code to the closest housing counseling agency.

“The task force wisely chose to use the existing network of housing counseling agencies as the hot line went into service,” McMaken said. “More than $250,000 has been allocated so far this year to strengthen the network.”

Officials said the hot line has contributed to the solution of lowering foreclosure rates in Colorado.

“It’s a powerful educational tool for homeowners who find themselves in foreclosure or unable to make payments, and the hot line provides one-on-one help to these people by providing little known information about their options,” McMaken said.

So why is such a task force needed? Reportedly, Colorado has a foreclosure problem.

Realtytrac, a company based in Irvine, Calif., that tracks foreclosures, has found that Colorado tops the country in foreclosures per capita. However, it recently listed Nevada has having just passed Colorado in the category.

McMaken said there’s no single reason why Colorado has so many foreclosures, adding that “trigger events” that can lead to foreclosure can include loss of job, illness and divorce.

“Homeowners with adjustable rate mortgages may experience a large increase in the monthly payment when interest rates change, and be unable to make the new larger payments,” McMaken said. “Fraud can be an issue for many, as can very ordinary things like simply becoming financially overextended.”

Insiders have said a complicating factor can be the lack of home appreciation in recent years.

“Home values in many areas of Colorado have more or less flattened out while in the late 1990s and early 2000s, home values increased substantially each year,” McMaken said. “This meant that if a homeowner found himself in trouble with payments, he or she could simply sell the home fairly quickly. We are told that today for sale homes are on the market for four to five months, making it very difficult for a homeowner who his lost a job to keep up with the payments.”

Lending practices

He added that there may be some link between historically high home ownership rates and higher foreclosure rates.

“High foreclosure rates may also be a product of aggressive lending practices and loan products that carry high risk in terms of the general notion of suitability,” he said.

Experts have said that because of the rise of homeownership in Colorado in recent years there have been many first time homebuyers entering the market, and housing counselors said that those who have been in the home for less than five years make up a disproportionate number of households they see in foreclosure.

McMaken said the task force will be releasing a new series of television and radio ads this year designed to increase awareness of the hot line and its value as a tool for early intervention, education and foreclosure prevention.

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