Experts disagree on foreclosures trend in Garfield and nearby counties
Garfield County, along with Mesa and Eagle counties, has been riding a roller coaster of home loan foreclosures for the past 26 years since the oil shale bust in May 1982.There was a low in the mid-1990s and then a rise since the turn of the millennium. All three counties have followed roughly the same trend, though Eagle County has a much higher rate of foreclosures overall.All three counties had a major spike in foreclosures in the mid-’80s, with Garfield peaking at 244 in 1985, Mesa peaking at 1,600 in 1985, and Eagle peaking at 599 in 1987. Since the ’80s, all three counties experienced a solid drop in the number of foreclosures. Garfield’s low was 14 in 1996, Mesa’s was 43 in 1994, and Eagle’s was 47 in 1994.Since the ’90s, however, the number of foreclosures has risen steadily in all three counties, and depending on who you ask, the next few years are distinctly uncertain.”I think we’re on our downturn,” said Bob Slade, Garfield County’s chief deputy public trustee.Alpine Bank mortgage consultant Mike McAvoy disagrees. “I think this is going to even climb more in the next three or four years,” he said.For this year at least, the numbers back Slade. Last year, there were 121 foreclosures on homes in Garfield County, the most since 1987. This year, however, Slade estimates he’ll have only 96 to process, even though the months when the number of foreclosures spikes – August and December – are still to come.Still, Slade has every reason to expect that his estimate will be accurate, and he sees that as a positive sign, especially for the little guy.Slade believes that currently the majority of foreclosures comes from suburban developers who have anticipated a market that simply isn’t there.”This year, it’s been the big development areas, the speculation areas,” said Slade. “I just recently had a $10 million foreclosure on a place called Alkali Creek.””Just because they can’t sell them,” he said.Among individual homeowners, though, Slade said one of the biggest contributing factors to the rates has been the economy.”The whole economy was really strong in the mid-’90s under the Clinton administration, and it’s taken a downturn from that,” said Slade, and pointed to the low foreclosure rate of the ’90s.”You can definitely see where the economy is booming, it slows down, starts booming again. It’s all cyclical,” McAvoy said. Another big factor in the foreclosure rate, according to McAvoy, has been how the number of 100-percent-interest loans has gone up since the late ’90s.”The number of exotic loans that are out, the 100-percent financing, the interest-only, the option arms and things like that where people just don’t understand or aren’t explained to what the ramifications are of that,” said McAvoy.Foreclosures these days are often the result of a combination of an irresponsible lender and an ill-informed home buyer, McAvoy said. What happens is customers get fooled by an attractively low interest rate and then wind up over their heads because they don’t understand that a minimum payment is different than an interest rate.”These people say, ‘Well I’m at 1 percent or 4 percent.’ What that is, that’s the minimum payment, that’s not even the interest-only payment. So if you’re at that 1 percent start rate, and interest rates are let’s say at 678, then you have that 578 difference. That isn’t even covering the interest-only portion. That creates a negative amortization, so that money is being stacked onto your principal balance, so now you owe more than the house is worth. That’s where people are getting themselves into trouble,” said McAvoy.Since predatory lending is still running rampant, McAvoy believes the number of foreclosures is going to go up in the coming years. In the hopes that he’ll be proven wrong, however, McAvoy advocates educated homebuying.”People come in and borrow for the biggest purchase of their life, and they talk to one person and that’s it. They’ll go out and buy a car and they’ll go to seven different dealerships and go to Consumer Reports and look things up there. You gotta really know what you’re getting into,” said McAvoy.As Slade points out, though, even homeowners who face foreclosure aren’t necessarily at the end of their rope. Typically, a foreclosure will take about six months for Slade’s office to complete, but it’s not unheard of for foreclosures to take years to complete.”I have some that because of court orders have dragged on for over two years,” said Slade.And during this time, it’s always possible that homeowners will somehow figure out a way to keep their homes.Contact John Schroyer: 945-8515, ext. email@example.com
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