Mortgage defaults force Denver exodus
On some Denver blocks, as many as one-third of residents have lost their homes.
DENVER -- Foreclosures are ripping through the rows of new homes in the flatlands where Denver turns to prairie. Every week, 10 more families here need to find someplace else to live.
Six months behind on their mortgage, Dave Evans and his wife, Suzie, packed the contents of their modest blue house here into a rented truck one day in July. The move came after weeks spent alternately crying and searching in a frenzy for somewhere to go. "At the end, it was so close we could have wound up on the streets," Dave Evans says.
Around the corner, Paul Dardano moved his wife and children into his mother's duplex after he realized his house was headed for foreclosure. Then their friends' houses here started emptying, too, as they scattered to relatives in other cities.
"It just happened," Dardano's wife, Eva, says, "one after another."
For hundreds of homeowners in this mostly middle-class corner of Denver — and an estimated 1.2 million more nationwide — the wave of foreclosures battering U.S. financial markets is quickly unraveling the American dream. Those who have lost homes here describe seeing their lives crumble into anxiety and embarrassment. Many leave for cheap apartments or rooms with relatives, a trend that is tightening the market for affordable housing.
This small corner of the Mile High City represents an extreme example of how foreclosures are transforming lives and neighborhoods. On some blocks, as many as one-third of the residents have lost their homes, making this one of the worst hotspots in a city that was among the first to feel the pinch of the foreclosure crisis. Many houses here remain empty, bank lockboxes on the front doors.
The foreclosure epidemic has swept so quickly through this part of Denver that in less than two years, lenders took action on 919 of the roughly 8,000 properties here, according to city records. Their owners defaulted on more than $171 million in mortgages they had used to buy their way out of apartments and into cul-de-sacs. Many were buying homes for the first time, in what seemed the most affordable of the city's new subdivisions. They paid their way with easy credit — sometimes secured from aggressive lenders who appeared to look past the checkered credit histories and unstable jobs of some of their customers. Ultimately, many of the buyers couldn't afford their mortgages.
Today, the tide of unpaid bills and lost homes is getting deeper.
Denver officials say they expect 11,000 foreclosures this year, up from 7,700 last year, mirroring increases nationwide. By the time homeowners get a foreclosure notice in the mail, they most likely have fallen too far behind in their bills to ever catch up, says Sindee Wagner, a deputy in the city's Public Trustee office, which processes the filings. Almost all of those who get such notices wind up losing their homes.
"The people ultimately getting hurt here are the homeowners, often lower-income people that probably should never have been approved for a mortgage in the first place," she says.
There has been little research tracking where those who lose their homes are going, says Nicolas Retsinas, director of the Joint Center for Housing Studies at Harvard. But Colorado officials such as Kathi Williams, director of the state Division of Housing, and housing assistance groups here and in other cities say demand for low-cost apartments is soaring. In some cities, those rentals have become so scarce or hard to get into that onetime homeowners either move in with relatives or leave town.
Meanwhile, two recent surveys of local officials and service providers, including one taken informally and completed last month by the National Coalition for the Homeless, suggest widespread foreclosures are driving an increase in homelessness and demand for emergency housing.
"Usually the handwriting on the wall has already dried by the time they realize they have to find another living arrangement," says Lou Tisler, the executive director of Neighborhood Housing Services of Greater Cleveland, a foreclosure counseling group in a city that ranks among the nation's worst for lost homes. "They're focused on the crisis at hand, not realizing there's another crisis behind" it.
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