Metro Denver Task Force Discusses Foreclosures

Posted at 10:45 AM, Jan. 26, 2007

On Thursday, January 25th the Denver Metro Task Force on Foreclosures met.  This was the first of 6 planned meetings to discuss potential remedies and to see what role cities could play in helping stop and reverse a foreclosure crisis that some neighborhoods are seeing.

According to Tom Clark, a vice president of Metro Denver Economic Development Corporation, lenders saw potential in Denver and other areas throughout the West with fast growth and rising housing prices.  With that came high risk loans to high risk buyers with housing prices seeing little to no rise.  These forces put Denver and Colorado into the number one spot of foreclosures.

How can Colorado move out of this status?  Job growth!  In 2006 all the jobs lost in 2002 and 2003 were finally replaced. 

For more information and the effects of foreclosures within neighborhoods and the schools visit the Denver Post online.

Foreclosures in Colorado

Posted at 9:25 AM, Jan. 25, 2007

Colorado has the number one spot in 2006 for ..... foreclosures!  This is not the spot where Colorado wants to be.  But Colorado is not the only place that is seeing a high number of foreclosures.  California saw an increase in foreclosure notices of 145% in the fourth quarter of 2006 compared to the fourth quarter in 2005.

In Colorado, one in every 33 households had a filing of foreclosure during 2006.  Following Colorado is Georgia and Nevada with a filing for every 41 households.

Most loans are going into default within 1 to 2 years after the original loan was made with most banks beginning the foreclosure filing when the loan is about 5 months behind.  In Colorado, a higher percentage of properties go from the filing, through the "bank sale", and the transfer back to the bank - 45% compared to below 20% for the National Average.

Some reasons that foreclosures are at a higher rate - appraisers valuing homes higher than market, ability of more people being able to qualify for a home loan, interest only loans, ARMS, 100% financing with low home appreciation rates due to overbuilding, consumers with more debt than they can afford, and other inventive loan programs available.

Foreclosures have an effect on HOA's with dues receipts, housing prices, economy, and the well being of a community.

In Colorado, the legislature is looking for ways to protect consumers from loan and appraiser fraud.  In the long run, the question will be, "Does this help or hurt the consumer when the dream to own a home is just that a dream and can not be a reality?" 

For more information about Foreclosures in Colorado, visit the Denver Post online.

Increases in Rents Seen

Posted at 3:38 PM, Jan. 24, 2007

Something that will make property owners smile - rents are expected to rise in 2007!

Something that will make residents frown - rents are expected to rise in 2007!

It's amazing how one item can make two different groups feel so differently.

In 2007 apartment rents are expected to rise by 19 percent with incentives going away.  Some of these incentives have included free rent, airline tickets, and more.  Why is this happening?

The Denver metro area is seeing more people moving in from California and other areas where the cost of living is higher or where the job outlook is bleak.  With that, residents will come and investors will follow or even will lead taking a risk that the market will get better.  Apartment investors took a risk of $2 billion dollars in 2006 buying apartments when usually only $700 million is spent.

Residents - here is something to smile about.  Today investors are paying over $94,000 per unit compared to over $37,000 in 1996, an increase of 151% while the average rent has only increased 40% during the same time from $607 to $850.  If you are looking at single family homes, the average purchase price for the same time frame has increased 86% from over $133,000 to over $247,500.

To read more about increases in rent, visit the Denver Post's Business Section of January 24, 2007.

Lease Purchases

Posted at 1:24 PM, Jan. 20, 2007

About two years ago, I had many owners start asking me about marketing their home as a lease purchase option.  With so many inquiries, I thought I should talk with the attorney I work with specializing in tenant landlord law. 

The one thing that he stated that really hit home was that he has seen judges rule a lease purchase contract as a purchase, not as a lease.  The resident didn't pay the rent when due and the owner forwarded the file on for an eviction to be filed.  In the courts for the counties that I work within, an eviction, from filing to the date of a sheriff assisted physical eviction is usually 30 days or less.  Depending on the agreement you have with your attorney, it may cost a couple of hundred dollars. 

If a judge looks at the contract and decides that it's not a lease but a purchase, you are looking at a foreclosure process, not an eviction.  This has to run through the specific legal foreclosure process which can take 6 months or more.  Also, you are looking at legal fees that are starting to run into the thousands. 

Is it easier to go one month without rent as an eviction is processed or several months as you process a foreclosure?  That is something that an owner needs to decide on.

What most people will say - that will never happen to me as I screened the residents really well.  Or, they seem like honest people.  And most owners/landlords are right.  But when life throws a curve that no one is expecting, life's bumps in the road can make other things happen.

As a resident, if you enter into a lease purchase agreement, many owners will request a higher deposit and/or a higher monthly rent.  The owner is trying to cover future losses for the above circumstances or other costs associated with the property.  The owner is taking a chance that you will purchase the property.

Also, as a resident, how are you protected that the owner is paying the mortgage with the increased rents that you are paying?  I've had some residents come to me after being in a lease purchase option and the home was foreclosed upon and they needed a new home.  That is not the way anyone wants to loose a home.

If as an owner and a resident it is decided that a lease purchase is the way that all parties really want to go, consult an attorney that focuses on writing contracts that will keep both parties protected.  I've also been told that having a lease that does not mention the purchase and a purchase contract with a future purchase date listed, is another way to keep all parties protected.  Just remember, only about 4% of all lease purchase options are ever optioned to purchase of the home.

Disclaimer: This in no way should be deemed as legal counsel but just generalities in regards to lease purchase options.  It is very important that you work with people that are very knowledgeable in this field to protect yourself and the property.  This is not something that you should use generic forms for as you are talking about one of the biggest investments many people make - a house.

Landlord Service Revert

Posted at 1:00 PM, Jan. 20, 2007

If you are leasing your property, what happens to the utilities when the resident moves out?  Many leases will state that the resident is not to turn off the utilities but many utility companies will not revert service back to the owner's name without a phone call or a written authorization.

While working with the properties that we manage, we have found that IREA (Intermountain Rural Electric Assocation) and Xcel are very easy to work with when it comes to changing the utilities back into the owner's name between residents.  When it comes to Aquila, they are adament about having a revert form on record or they will not revert the utilities.

If you would like an Aquila revert form in PDF or PDF fillable, A Vantage Properties has you covered.  This is just one of the many items we include with our leasing and management agreements for our owners to keep you and your property protected.

To learn more about our leasing, management, and consulting services, e-mail us or visit our web site!

For some landlords located within Douglas and Elbert Counties, Aquila

Housing Price Correction Ending Soon

Posted at 9:31 AM, Jan. 11, 2007

In the Business section of Wednesday's (January 10, 2007) The Denver Post there is a great article that discusses that the Housing Correction in prices that we are currently experiencing will be ending soon per economist Carl Tannenbaum.  Tannenbaum reminded his audience at the National Association of Industrial and Office Professionals' annual forecast breakfast on January 9, 2007, even though home prices declined 4% over the past year, home prices rose 60% between 2001 and 2005.

Per Patty Silverstein of Littleton-based Development Research Partners, Colorado's employement grew by 2.2% in 2006 where national employment grew 1.4% during the same time frame.

For the full story visit the Denver Post.