The Foreclosure Report

'A Lot Of People Got In Over Their Heads'

The Rocky Mountain News has this update from Denver. "More than 9,500 real estate foreclosures have been filed in the Denver area in the first half of the year, about 34 percent more than in the first six months of 2005. It's on pace to be the worst year ever in terms of the number of foreclosures, topping 17,122 in 1988, though the area's population growth since then means the total percentage of homes in foreclosure is smaller."

"'I do believe there is a crisis,' said Peter Lansing, president of Universal Lending, who served on a foreclosure task force during the late 1980s. 'We do need to do something about it. It is all of our responsibility.'"

"Experts said foreclosures are being driven by several factors: adjustable rate mortgages that are rising with interest rates; interest-only loans; houses sold to people with less than stellar credit ratings who in previous years wouldn't have qualified for loans; programs allowing homes to be purchased with no down payment; overbuilding; the lack of new, high-paying jobs; and predatory lending and fraud."

"Soaring foreclosures are a puzzle because the rest of the economy is doing so well, said Tom Clark, executive VP of the Metro Denver Economic Development Corp. 'We thought the foreclosures would wash out by the end of the summer, but now with rising rates it looks like that is not going to happen until the first quarter of 2007,' Clark said."

"Economist Tucker Hart Adams said she has no doubt it will get worse before it gets better. 'I'm trying to figure out how much worse.'"

"She said many homeowners, already stretched by other consumer debt, can't afford to pay hundreds of dollars more per month as their adjustable rate mortgages move upward. 'I think in the '90s, when we had this unprecedented improving economy, we convinced ourselves the good times would never stop,' Adams said. 'A lot of people in Colorado just got in over their heads.'"

"Real estate broker David Binkowski in Denver, said most of the foreclosures he sees are in homes priced below the $300,000s and the owners often have refinanced out all of their equity."

"Lansing said..'we did have a woman come in our office who wanted a reverse mortgage, and we looked at her history, and her previous lender just had her refinance, and refinance, and refinance, just to generate fees.'"

"Lansing said consumers need to educate themselves. A lot of it is common sense, he said. 'You don't really believe there are 1 percent mortgages, do you? But just the other day I heard an ad on the radio talking about getting a 1 percent mortgage.'"

posted by Ben Jones @ 12:28 PM