Colorado was a leader when it came to missed mortgage payments and foreclosures in the years before the 2008 financial crisis. Now, no state can compare when it comes to borrowers who are timely on their mortgage payments and hanging onto their homes.
The share of mortgage loans in the state past due 30 days or more stood at 1.78 percent in April, according to Black Knight, a mortgage technology firm. That is only slightly above the record low of 1.76 percent reached in the state last August.
Colorado has had the lowest rate of mortgage delinquencies of any state for 26 consecutive months and has ranked in the bottom five states for the past 94 months, said Mitch Cohen, a spokesman for Black Knight.
When it comes to the share of mortgage loans that are seriously delinquent, past due 90 days or more, Colorado has had the lowest rate of any state for 14 months and ranked among the bottom five for 49 months.
And it’s not because other states are slouching. The U.S. national delinquency rate hit a record low in April based on records back to 2000, according to Black Knight.
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“Colorado has consistently outpaced the national average in many top-level economic metrics, including — but not limited to — both GDP and population growth. Combined with rising home prices, a strong economy and a robust job market, these factors have all helped keep a lid on mortgage delinquencies,” said Andy Walden, Black Knight’s director of market research.
Colorado home prices have risen more than 80 percent since 2011, double the gain seen nationally, according to the FHFA Purchase-Only Home Price Index. All that appreciation has helped homeowners along the Front Range build one of the thickest equity cushions in the country.
Borrowers have a strong incentive to catch up if they slip behind. They also have an easier escape route if they can’t get current. In an undersupplied housing market like metro Denver, buyers have remained plentiful.
Last year, there were 1,461 homes sold in the state in a foreclosure sale. In 2007, nearly 40,000 homes went into foreclosure and nearly 25,000 ended up sold at auction, according to statistics from the Colorado Department of Local Affairs.
Denver housing economist Ryan McMaken, who compiles the state’s foreclosure statistics, said the market has seen less new home construction this cycle than the prior one, avoiding a supply glut.
The ability to sell a home quickly and for more than the debt borrowed against it may explain why far fewer homes are going all the way to a foreclosure sale, he said.
But it doesn’t explain why Colorado homeowners are missing mortgage payments at half the rate of everyone else. Are their financial stresses here in some way less than those in other states, even states with lower unemployment?
One explanation is that lenders have been much stricter since the housing crash in who they will lend to. It is simply much harder to purchase a home than it was last decade.
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“Credit quality in residential lending on a national level is very strong,” said Tom Wind, executive vice president of consumer lending at U.S. Bank, one of the state’s largest lenders.
Those underwriting standards are national. But Colorado had such a deep purge of homeowners via foreclosures that it meant a bigger share of buyers who took over came under the more stringent standards. And those who survived were more likely to toe the line.
“People can learn. There is no reason to expect the next financial crisis to play out in exactly the same way,” McMaken said.
