In an effort to end the foreclosure crisis, the Obama administration has been trying to keep defaulting owners in their Denver area homes, and nationwide with their Making Home Affordable program.  Now it will take a brand new approach: encouraging underwater borrowers to leave their homes more quickly.  This latest program is one of the administration’s most aggressive attempts to grapple with a longstanding problem that has defied solutions.

Upward of five million households are behind on their mortgages and are at risk of foreclosure, and the government’s $75 billion mortgage modification plan has helped only a small slice of them. Consumer advocates, economists and even some banking industry representatives say much more needs to be done. 

The new program, set to take affect in about three weeks - on April 5, could encourage hundreds of thousands of delinquent borrowers who have been unable to modify their loan to shed their houses through a process known as a short sale (selling a home for less than the mortgage balance). Lenders will be compelled to accept that arrangement, forgiving the difference between the market price of the property and what they are owed. 

To serve as incentive to bring the various parties to the table, the government intends to spread its cash around.  Under the new program, the servicing bank, as with all modifications, will get $1,000.  Another $1,000 can go toward a second loan, if there is one.  And for the first time the government would give money to the distressed homeowners themselves.  They will get $1,500 in “relocation assistance.”
Should the incentives prove successful, the short sales program could have multiple benefits.
For the investment pools that own many home loans, there is the prospect of getting more money with a sale than with a foreclosure.

For the borrowers, there is the likelihood of suffering less damage to credit ratings. And as part of the transaction, they will get the lender’s assurance that they will not later be sued for an unpaid mortgage balance.

For communities, the plan will mean fewer empty foreclosed houses waiting to be sold by banks. By some estimates, as many as half of all foreclosed properties are ransacked by either the former owners or vandals, which depresses the value of the property further and pulls down the value of neighboring homes.

In order to curtail fraud, under this new program, a lender will use real estate agents to determine the value of a home and thus the minimum to accept.  This figure will not be shared with the owner, but if an offer comes in that is equal to or higher than this amount, the lender must take it.

There are myriad other potential conflicts over short sales that may not be solved by the program, whose details are still being fine-tuned, but the administration is obviously hopeful that it will pave the way for major lenders to more readily work with borrowers in the short sale process.

Are you or someone you know facing foreclosure in the Denver area and think you might benefit from this new federal program?  If so, give the experts at the Bandy Team a call.  We will let you know what your options are and guide you ever step of the way with our experience and knowledge of the Denver metro housing market. 

Marianne Bandy
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The economic impact on Denver’s real estate market (and in general) of Aurora’s Fitzsimons project, scheduled to be completed this year, is likely to be huge.  When fully developed, the 32-acre Fitzsimons Village will include hotels, offices, shops and housing for nearly 35,000 Colorado residents.  What’s more, the former Fitzsimons Army Hospital (closed in 1999) is currently undergoing a $4 billion renovation plan, which is the largest medical-related redevelopment project in the US.

Right now, a small retail center near East Colfax Avenue and I-225 is the only one easily accessed on foot by the nearby students, doctors and other workers on the Fitzsimons campus, but that is going to change soon with some new neighbors planning to break ground.  With just one vacancy in the 20,500-square-foot center, tenants include Anthony's Pizza & Pasta, Chipotle Mexican Grill, Spicy Pickle, Noodles & Co., Caribou Coffee, Curves, FedEx Kinko's and IronStone Bank.

Construction of two developments across from the Fitzsimons campus are close to starting.  The first, from Bush Development, is planned to break ground this spring on its 4.5-acre site located at the southeast corner of East Colfax Avenue and Peoria Street.  That project will include a First Bank, 7-Eleven and Qdoba Mexican Grill.

Separately, developer Andrew Klein, who has teamed up with Corporex Colorado, said he expects to break ground this month on a 176,000- square-foot office building (occupied largely by Children’s Hospital) and a 153-room Spring Hill Suites hotel.

Neither construction project probably would be happening if it weren't for the redevelopment of the Fitzsimons campus.  Add to that plans to bring the light rail through, and we’ve got a great recipe for economic growth that will sustain both retail and residential development!

Are you interested in seeing what your housing options are in Aurora’s Fitzsimons Village?  Maybe you’d like to see the other possibilities for homes in Aurora communities, like Saddle Rock homes, homes in Tallyn’s Reach, houses at Buckley Air Force Base, or houses in Heritage Eagle Bend?  Just give your local real estate pros, the Bandy Team, a call!  We will help you discover all that living in Aurora or anywhere on the Denver front range can be!

Marianne Bandy
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