In a report from the Mortgage Bankers Association of America (MBA), the Colorado delinquency rate, which is the percentage of loans with payments overdue at least 30 days, was 3.14% at the end of the third quarter. The last time in Colorado history that mortgage delinquency rates were higher was in 1992 (3.23%).
 
While the Colorado rate remains lower than the national rate of 5%, experts warn that the worst might be yet to come. Over 30,000 people in the Denver area have lost their jobs in the past few months. Thanks to severance packages, people can continue to make their payments. Severance packages, however, do not last forever.
 
Many in the Denver-metro area have found the past decade of housing appreciation a saving grace. These people are selling their homes and making a profit. Many, however, are turning to foreclosure as the optimal way out. As of September 30, loans in Colorado that went into foreclosure equated to 0.68% (1.94% nationally). Real estate foreclosures rose 17.45% over the past year.
 
So what do these numbers and trends forecast for HOAs? Our collections department has seen an increase of 60% in the number of collection matters that we have handled in 2001 compared to 2000. This trend follows the same trending that our collections department witnessed in the early 90s: When mortgage delinquencies increase, assessment delinquencies follow in the same direction. Associations should brace themselves for an increase in delinquent assessments by having in place a collection policy to deal with this growing problem.
 
For more information about methods to prepare your association, please read the article “10 Ways To Prepare For the Economic Slowdown.”