IDENTIFYING THE ISSUES

The high incidences of foreclosure has had negative impacts on many of Denver’s communities which are evidenced in neighborhoods by abandoned and derelict buildings, lack of attendance and sporadic involvement of children and their families in the public school system, the lack of stability and leadership in faith communities, noticeable changes in crime that are attributable to a stagnant economy, depressed home values, and a general decline in neighborhood morale in the City.

The Task Force scheduled discussions with various community partners and industry experts over a six week period to identify neighborhood, church, school, and economic impacts resulting from home foreclosure. The Task Force sought to answer various questions: what problems were causing the high rates of foreclosures, were there national findings correlated to community problems, and what were other cities doing to slow down or eradicate the problem of foreclosures, especially in communities at risk. In Colorado, the top reasons given for foreclosure include: employment and income, inflation, mortgage fraud, and lack of education regarding mortgage products. Economic cycles relative to housing, interest rates, employment, and political goals impact how the nation and its local communities address problems that affect the quality of life of its constituents. The Task Force heard many reports and looked at information provided by national organizations to help them identify what the problems were and their source. Many problems were associated with mortgage products, lack of education, and language barriers.

The New York Federal Reserve Bank reported that incidences of foreclosures can be tracked by loan types. Traditional fixed rate mortgages are no longer the majority of loans being sought. The Joint Center for Housing Studies of Harvard University reported that one in five mortgages is subprime. A national delinquency survey conducted by Mortgage Bankers Association showed that subprime fixed rates and subprime adjustable rate mortgages (ARMs) were the highest incidences of foreclosures by loan types.