Few Aspen-area worker housing units winding up in foreclosure
The Aspen Times
Aspen CO Colorado
ASPEN – A greater percentage of foreclosures in Pitkin County so far this year are on deed-restricted worker-housing units than has been the case in the past few years, but the number of foreclosures within the housing program remains nominal.
Out of 57 current foreclosures, five – or 8.7 percent – involve units overseen by the Aspen-Pitkin County Housing Authority, county commissioners were told Tuesday during a broad overview of housing operations. Among this year’s foreclosure actions in the worker-housing realm, one was withdrawn, one owner declared bankruptcy, and the others are still going through the process.
When the Great Recession struck near the end of 2008, there were predictions of significant foreclosure activity within the worker-housing program, but that has not been the case, said Cindy Christensen, Housing Authority operations manager.
In 2009, out of 150 foreclosures in the county, seven (4.7 percent) were for deed-restricted housing. In 2010, the county saw 144 foreclosures, three of which (2 percent) involved deed-restricted units. One was purchased by the city of Aspen and resold, and the Housing Authority purchased the other one and resold it.
Last year, out of 113 foreclosures, three (2.6 percent) involved employee units. Two were purchased by the Housing Authority, which sold one back to the owner and another through a lottery. The third was retained by the owner, according to the authority’s report to commissioners.
The Housing Authority, which oversees about 1,500 units that are sold to qualified local workers (the program also has about 1,300 rental units), keeps careful tabs on foreclosure proceedings, according to Christensen.
“An awful lot of people will be teetering on the edge of foreclosure,” said Tom McCabe, housing director.
But, Christensen said, most of them cure the debt. A few have declared bankruptcy to avoid foreclosure, and some, on the advice of the Housing Authority, put their units on the market and sell them before they go through foreclosure. That way, they get back whatever equity they have in the unit. If a residence winds up at a foreclosure sale on the courthouse steps, the owner gets nothing, Christensen explained.
The housing office will bid $50 more than the minimum for a unit sold in foreclosure in order to retain it, but if the lender takes possession, the housing authority has 30 days in which to purchase it from the bank, according to Christensen.
If the bank kept possession, it could sell it as a free-market residence, minus the deed restriction that keeps it affordable to the working populace.
“We don’t want them to turn over in that fashion,” McCabe said. “That makes it our obligation to step up and rescue those units to make sure they don’t go to the free market.”
If a third party purchased the unit through a foreclosure auction, the buyer would have to be a qualified worker under the Housing Authority’s guidelines in order to reside in it. Otherwise, it would have to be sold to a qualified worker, virtually eliminating the chances of making a speculative killing on a deed-restricted residence.
The Housing Authority has a $500,000 line item in its budget to purchase units sold in foreclosure. It currently owns one three-bedroom, three-bathroom home in Woody Creek that was abandoned by its prior owners. They apparently just gave up and left; food remained in the refrigerator, Christensen said.
The unit will be cleaned in preparation for putting it back on the market, she said.
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