The Foreclosure Report

Here Comes The Bank: Colorado

The Longmont FYI reports from Colorado. "Colorado leads the nation in foreclosure rates, and Weld County leads Colorado. Weld housing officials blame the phenomenon mostly on gullible buyers who accept risky home loan packages including adjustable-rate, no-money-down and interest-only mortgages. Whatever the reasons leading to the spike, home values have dropped."

"In the second quarter of 2006, one of every 66 households in the county was in some stage of foreclosure. 'Wages did not keep up with the appreciation of homes,' said Matt Revitte, a housing broker in Greeley. 'So many buyers bought into a multitude of loan products thinking the party wasn’t going to end. But it happened. It always happens.'"

"According to Rick Sharga, a spokesman for RealtyTrac, a typical scenario in high foreclosure areas runs something like this: Three years ago, a couple wanted a $300,000 house and took out a $240,000, three-year, adjustable-rate mortgage to buy it. Monthly payments were $1,500. When home values slumped, the house’s worth dropped to $270,000. Now, the ARM has expired, and new interest rates have jacked the mortgage payments to $2,250 a month."

"They can’t pay it because they haven’t received the promotions or raises they were counting on at work. They can’t sell their house because too many similarly desperate people have also put their houses on the market, and at super-low prices in their rush to unload. 'Now panic starts to set in,' Sharga said. And with missed mortgage payments, here comes the bank."

"Some say the county is overbuilt and that local governments should issue fewer building permits. Others argue developers wouldn’t still be building unless they believed their homes would sell soon. The market will take care of itself, they say. In any case, Weld County residents need to start buying homes within their means, said Tom Teixeira, director of the Greeley/Weld Housing Authorities."

posted by Ben Jones @ 9:59 AM