Saturday, February 11, 2006

More Colorado Towns See Defaults Jump

The Pueblo Chieftain reports on defaults in that Colorado town. "Foreclosure rates remain high in Pueblo and the rest of Colorado. The Pueblo County Trustee's office reports completed 806 foreclosures last year, up from 663 the prior year and three to four times more than the 200 to 300 foreclosures a year of the late 1990s."

"Thus far this year the office reports getting 110 foreclosure filings."

"Pueblo County Public Trustee Peggy Foley, who has held her position since 1999, said more people appear to be buying houses too expensive for their budgets. She recalled seeing few deficiency bids when she first began in office. Deficiency bids are notices that lenders submit when people owe more on their foreclosed home than its appraised value. The bids give lenders the option of going after homeowners for personal judgments beyond their lost property."

"Foley said deficiency bids have become more prevalent in recent years when mortgage companies gave homeowners the option of refinancing their home for as much as 125 percent of its value. For example, a person might own a home appraised at $80,000 but refinance it for $100,000. If the house went into foreclosure, the lender could seek a deficiency bid of $20,000 from the homeowner through a legal process beyond the foreclosure proceedings."

"Another shift Foley noted: The public trustee's office now routinely handles many more Pueblo West home foreclosures. Foreclosure activity from the Colorado City-Rye area also has become more common."

"While there's no scientific way of knowing why foreclosures occur, Foley said her staff does hear stories from homeowners when they come into her office. The reasons most mentioned, she said, are divorce, death of a spouse, job loss or household income reduction, major illness, major car or home repairs, too much debt and/or poor money management and predatory lending."

"Financial experts say Pueblo is ripe for 'predatory lenders.' The companies offer to refinance mortgages, usually for people with credit problems, but in the end drain homeowners' equity with high fees and insurance premiums that often aren't necessary."


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