Both foreclosure starts and releases of deeds of trust were up in July, according to the El Paso County Public Trustee’s report.
Deeds of trust are released when a mortgage is paid in full either over time or through the sale or refinancing of the property.
There were 3,658 deed releases in July, approaching the 4,000 mark that trustee Tom Mowle has said is close to the “normal” level for a healthy real estate market.
There have been 20 percent more deed releases year-to-date in 2012 than for the same time period last year.
Mowle estimates that there will be 39,000 deed releases by the end of the year, 22 percent more than 2011.
Mowle’s office also started 328 foreclosures in July, 6 percent more than year-to-date in 2011. He said he doesn’t expect that pace of foreclosure filings to continue.
“The last of the creative financing arrangements would have been resetting in early 2012,” Mowle writes.
He said lenders might also be releasing some of their “shadow inventory” now, which could account for the surge.
Mowle said it’s hard to predict what the trustee’s office will process in 2013. The country is in the midst of a slow and fragile recovery, he said. And local factors complicate predictions even further.
He said he’s not sure what impact the Waldo Canyon fire will have on the market. He said it could put “slight” upward pressure on foreclosure and downward pressure on deed releases as it could dissuade people from immigrating to the area and create economic hardships for those impacted.
The more significant question mark is the threat of defense sequestration, Mowle said.
“Since I neither know whether or not it will be averted, nor how much the cuts in government spending will affect Colorado Springs compared to other areas with a lot of military spending,” Mowle writes, “I can’t take the sequester into account except to say that I expect my 2013 estimates to be way off, but I don’t know which direction they are off.”
He said that if the sequestration goes into effect and impacts Colorado Springs significantly, it would drive foreclosures up and deed releases down. But if sequestration doesn’t happen, deed releases will be higher and foreclosures will be lower than Mowle estimates.
He predicts that there will be 40,000 deed releases, up 5 percent from 2012 predictions, and 2,700 foreclosure starts, down 19 percent from 2012 levels and at their lowest level since 2006.