The Foreclosure Report

'Short Payoffs' Growing In Denver

The Denver Post reports on the situation in that city. "The median price of an existing single-family home in Denver last month edged up 4.2 percent over January last year to $245,000 but was flat compared with December, continuing to signal a shift to a buyers' market. The median price for condos dipped 1.3 percent from January 2005 to $155,000, according to statistics released Thursday."

"(Broker) Dave Miley said he has noticed a number of home sales brochures advertising that contracts are subject to the acceptance of a 'short payoff' from the lender. That's a sale where a lender allows the property securing a mortgage to be sold for less than the existing loan balance, because of factors such as the borrower's financial circumstances, the property's physical condition and local real-estate market conditions."

"For example, if the mortgage on a $300,000 home is $290,000, the expense of selling it would surpass the home's value. 'The commission itself would be something like $15,000,' Miley said. 'Sometimes, the lenders will cooperate and accept less than their $290,000 balance. If they can do it for $285,000, it's easier than foreclosing.'"

"The flattening of prices indicates that the market is slowing, said Tucker Hart Adams, a regional economist with U.S. Bank in Denver. The market also indicates that consumers are stressed about debt and are curbing their use of credit, she said. And because housing prices aren't rising, there isn't more equity to tap into each month."

"'You can't spend more than you make forever,' Adams said. 'Consumers, whether they're buing a house, car, television or refrigerator, are going to be forced to be more careful.'"

posted by Ben Jones @ 12:38 PM