Colorado's foreclosure crisis may not be as dire as a national report contends, according to a state report released Tuesday.

The Colorado Division of Housing report shows there were at least 28,435 foreclosures in the state last year, a 31 percent increase from 2005. The report covers an estimated 95 percent of the foreclosures in the state.

In contrast, a report from Irvine, Calif.-based RealtyTrac said Colorado, with 54,747 foreclosures last year, had the highest foreclosure rate in the nation.

RealtyTrac said one in 33 houses in Colorado was in foreclosure last year, while the Division of Housing study shows one in 58.

The numbers are so far apart because of different methodologies used by the state and privately held RealtyTrac, whose main business is selling lists of foreclosed properties.

Kathi Williams, director of the housing division, said RealtyTrac is counting some foreclosures twice and maybe three times.

"First and foremost, it is important to have reliable data," Williams said. "I see RealtyTrac's numbers and I see the numbers we are getting from the public trustee offices, and it creates great concern for us because they are so different. The truth is the truth. We neither want to under-report what is happening, nor do we want to over-report it."

Rick Sharga, vice president of marketing at RealtyTrac, said it is possible some properties are being counted more than once. But because it uses the same methodology in all 50 states, the No. 1 ranking probably is accurate.

Williams, however, argued RealtyTrac's conclusions are not consistent with other national reports or with what large lenders are seeing in their own portfolios.

Sharga said he plans to meet with Williams and others in Colorado to "reconcile our reports.

"The bottom line is that, no matter which report you use, the amount of foreclosure activity in the state has gone up significantly over the past year," he said.

While the Denver area had a record number of foreclosures last year, Williams said she suspects this is only the second- worst year for the entire state.

In the foreclosure crunch in the late 1980s, no part of Colorado was immune, she said.

This time, most of the foreclosures are centered in Adams, Weld, Arapahoe, Denver and Pueblo counties, she said.

"This is still a serious problem," Williams said. "But I do not think it is yet a record for the entire state. But it's No. 2 and could pretty easily become No. 1."

One solution she said she is exploring is asking lenders to waive prepayment penalties and allow homeowners in default to refinance mortgages at lower market rates.

Former Boulder Public Trustee Sandy Hume is working with the housing division as a foreclosure expert and said "There's a big misconception out there that lenders want your home. What they want is your principal and interest payments.

"But if you don't have a job, an income stream to make the payments, working it out is a nonstarter."

rebchookj@RockyMountainNews.com or 303-954-5207