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Foreclosures Plaguing Colorado Credit Report

By Faye Mergel
Published: Sunday, November 29th, 2009

More Colorado consumers will be carrying negative items on their credit report in the next seven years as the state’s foreclosure rates soared to nearly-record high last quarter. If the trend continues, 2009 could be one of the most devastating years for homeowners, and would beat previous record lows that hit residents in 2007.

Foreclosures Plaguing Colorado Credit ReportAccording to Ryan McMacken of the Colorado Division of Housing, there were 39,000 foreclosures recorded in 2007. But he predicts a significant increase as the year ends. At the pace that homes are being foreclosed in 2009, he calculated that it will go over the 40,000 mark, even reaching 42,000 or 43,000.

The Mortgage Bankers Association reports that more than more than 14 percent of homeowners across the United States who have mortgages are either late on their payments or in foreclosure at the end of September. They note that this is the ninth straight quarter when the rates hit a record high.

But McMacken sees a brighter side in the situation of Colorado homeowners. He says while open foreclosures are rising across the country, the number of residents who are actually losing their homes is going down.

25,000 people lost their homes in 2007, tipping the scale to a record high for Colorado. The numbers went down in 2008 when the number of people who were foreclosed upon went down to 21,000. This year, foreclosure rates are expected to remain at or even go below 21,000.

The Colorado Foreclosure Prevention Hotline, an agency of the Colorado Division of Housing, is helping homeowners find a way to deal with foreclosure. McMacken says the hotline does not really keep people from being foreclosed upon but it helps them take advantage of loan modifications and do short sales. Additionally, it helps residents keep whatever equity they have on their homes and prevent a foreclosure from being recorded on their credit report. The Housing Division says they have helped roughly 13,000 homeowners since the hotline was launched in 2006.

McMacken encourages Colorado homeowners to dial the hotline since the counseling and other services they Housing Division offers will be free of charge.

Industry specialists advise homeowners to do everything they can to avoid foreclosure since it will severely hurt their rating if it reaches their credit report. Consumers who are on the verge of foreclosure are advised to negotiate with their lenders for a modification of their mortgage terms.

Another option some experts recommend to keep a foreclosure from ravaging is credit report is short sale. This still impacts a consumer rating negatively but it is not as bad as a foreclosure.

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