248 lose their property to foreclosure in 2011 in Routt County
September 17, 2011
Steamboat Springs — The number of people losing their Routt County property to foreclosure has surged this year compared with 2010's already grim toll.
Records at the Routt County Public Trustee Office show that through August, 248 people or business entities had seen their real estate returned to the financial institution holding the note. That number represents an 84 percent increase from the 135 who lost their property in all of 2010.
As recently as December 2009, with the national recession and real estate decline in full swing, Routt County Public Trustee Jeanne Whiddon reported that the number of people who had lost their real estate in foreclosure was 23 through the end of November. And in 2007, when Routt County's real estate boom was hitting a crescendo, 10 of 47 pending foreclosures resulted in the banks reclaiming foreclosed buildings and land, she said.
The rising number of people losing the equity in their real estate and going through the personal financial pain of rebuilding their credit after a foreclosure could indicates that the local market has reached the point in the cycle when foreclosure filings are maturing into their sometimes-inevitable outcome.
Foreclosures are difficult to track because the interim between a foreclosure filing (notice of election and demand) and final resolution at a trustee's public sale often stretches across calendar years. That's particularly true when the institution holding the note postpones scheduled sale dates.
Whiddon's office most closely has reported the number of new filings during each of the past few years. They are on track to exceed 300 again this year. That suggests that the community may not have seen the worst of the property losses.
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John Kerst, vice president of business development for Yampa Valley Bank and its former longtime president, has worked through previous recessions and cyclical housing markets here.
Kerst said he thinks the growth in the numbers of properties lost to foreclosure in 2011 compared with 2010 reflects a lagging indicator of the broader economy. And that's doubly so in destination resort communities like Steamboat.
"We already know that Steamboat and the rest of the resort markets lagged the national real estate economy on the way down to the baseline, and they are also lagging on the comeback. If we look at the last 12 to 18 months, the national economy has flattened out," Kerst said. "I wouldn't say it's good, but it's gotten better."
Mountain communities have yet to reach that point, he said.
Foreclosure filings lag the economy partly because of human nature, he said.
"Individuals will do everything they can to hang on up until the last minute. The realization that they are going to lose their property doesn't trigger until almost everything is exhausted," Kerst said. "My heart goes out to a lot of people in this economy."
In many cases, losing one's home is not the inevitable outcome. Whiddon has observed in the past that it's not unusual for foreclosures to be resolved in mid-course. Foreclosures are sometimes cured or withdrawn by the bank holding the note after reaching satisfactory arrangements with the borrower. Anecdotally, the large majority of foreclosure filings here are filed by banks in distant cities.
The foreclosure process culminates in a public trustee's auction that happens every Wednesday in the hallway outside Whiddon's office in the lower level of the Routt County Courthouse.
The auction allows members of the public to acquire the foreclosed property for an amount acceptable to the bank that holds the note. The bank qualifies what price it might accept by submitting a bid of its own to Whiddon's office. The bank's bid functions as a qualifying bid.
In practice, it's rare that any third parties bid on foreclosed properties here. Whiddon said she's seen no more than about five in 2010 and 2011 combined.
Bidders have to perform their due diligence in advance of a sale they are interested in. To close the deal, they must return with a cashier's check for the full amount by the end of the day that Wednesday.
In addition to the number of properties lost through foreclosure in 2010 and 2011, Whiddon provided a report this week on the outstanding balance on the mortgages of the foreclosed properties and the bid at auction.
The outstanding balance gives a sense of the value of the property but is somewhat misleading because it includes interest due to the bank and a few fees, including the cost of related public notices required by law when a notice of election and demand is filed.
The total of the outstanding balances attributable to the 248 foreclosures finalized through August 2011 is $85.2 million. That compares with $63.2 million for 135 foreclosure sales in 2010.
Discerning a trend among the balance figures is another complex task. The individual amounts have varied widely in 2011, from as little as $59,900 to more than $11 million. Sometimes the bank's bid at auction is more than the outstanding balance, and sometimes it's less, depending upon the bank's position on what it is worth.
The highest dollar amount for a foreclosure in 2011 was attributable to the foreclosure on the uncompleted Chadwick Estates development on Eagle Glen Drive (minus the first building in the project), which carried an unpaid balance of $11.75 million.
The deed was transferred to Community Banks of Colorado in Pueblo.
Kerst said it would take more time for Routt County to work its way out of the prevalence of distressed properties in the local real estate market.
"We're seeing a lot of properties selling under a Fannie Mae or a bank name," he said. "We've got some time to go for these lagging indicators go up."
To reach Tom Ross, call 970-871-4205 or email tross@SteamboatToday.com