Colorado Home Mortgage Loan

Colorado Foreclosures are at an all time high.  These Colorado Foreclosures have followed the same statistics found in many other markets throughout the U.S.  So in short we are not experiencing anything that is not in line with national averages.  However, we are experiencing some of the worst Colorado Foreclosures ever recorded in Colorado History.  There are many reasons for the Colorado Foreclosures.  I will try to break some of these reasons down for you today.  The first and most obvious reason for Colorado Foreclosures is that Home owners are not making their payments due to economic hardships.  Loss of employment for one or both members of a house hold will play havoc on their ability to make payments.  This is really self explanatory and based on the state of the economy we are seeing many households faced with this issue.  Colorado Foreclosures have always had these factors contributing to its statistics, but there are even bigger issues going on.  Colorado Foreclosures are experiencing new phenomenon’s in the industry with the adjustments of the once popular Adjustable Rate Mortgages or ARM’s. 

There are many types of ARM products available and not all ARM products are bad.  The issues that Colorado Foreclosures are facing are the Subprime ARMS commonly know in the business as 2/28 or 3/37.  These programs were designed to force homeowners to refinance after 2 or 3 years.  We called these band aid loans because when the adjustment period starts it will actually adjust 2% every 6 months until it hits the market cap rate around 12.5%.  You can see why Colorado Foreclosures were impacted so quickly.  Home owners that got into a 5.5% 2/28 program actually jumped up to 7.5% and 9.5% before the 3rd year ended.  Colorado Foreclosures spiked because homeowners had to make payments that got out of control.  As I stated before these programs were designed to get out of after the 2 or 3 year period but something held them back.  What held them back was the fact that homes were not appreciating to a point where refinancing was possible.  FHA home loans require a minimum of 5% equity in the home and were designed to be the loan these clients got into after the adjustment period began.  Colorado Foreclosures and bad economic conditions forced many homes on the market and with the supply so high Home prices tanked.

Colorado Foreclosures began to see more and more homes entering into Colorado Foreclosures status.  Homes were not maintaining the value needed to qualify for a new loan and interest rates were adjusting out of control.  Home owners were faced with a decision; continue making a payment they can’t afford or stop making payments all together.  If they choose to stop making payments the home owner was able to save the money needed to get into a rental property shortly before the official Colorado Foreclosures took place.  It is clear why so many people are electing to go into Colorado Foreclosures when the only repercussion was that they had to move.  I can’t blame just the homeowner in this situation.  Mortgage Brokers failed and Lenders failed by allowing such loose standards in underwriting the homes.  Ultimately these brokers and lenders were the primary contributors to the number of Colorado Foreclosures being put on the market today.  A lot of money was made by everyone involved.  These individuals choose income over doing what was right for the industry and the consumer. 

Realtors were simply pricing homes for what the market would allow so they probably could have seen what was happening, but ultimately are the least likely to blame for Colorado Foreclosures running as high as they are.  Brokers and Lenders top my list of who to blame for Colorado Foreclosures being where they are.  Lenders for allowing bad credit individuals to qualify with debt ratios so high that any increase of payment would send the consumer out of control.  They knew what these loans would do and should have seen that Colorado Foreclosures would be the result.  Brokers who used aggressive appraisals to qualify people on over inflated properties and failing to educate their consumers on the repercussions of the loan they were getting into.  Can you imagine a broker that would push an unethical appraiser to value a home 25% above the actual value and then put their client into a loan they could barely afford knowing it would go up by 2% every 6 months two years later?  On a $200,000 loan the payment went up over $250 a month and $500 a month in the 3^rd year. These loans had no other outcome to be had but to have them enter into Colorado Foreclosures.  These brokers should be prosecuted and the Lenders fined to a point where their ability to do business goes away. 

The reason I feel so passionate about holding people accountable is that WE ALL PAY for these mistakes.  We pay in the sense that our homes are not appreciating the way they should.  We pay in the taxes that are given to these lenders in Federal Aid or Cheaper bailout money issued in Treasury bills.  We also pay in the losses suffered in portfolios that were tied to the perception that the paper sold in these portfolios were in a risk category not expected to default.  When Colorado Foreclosures spiked the people that bought these mortgage backed securities suffered greatly and even had some people loosing their entire portfolios.  The money in these portfolios were counted on for retirement, College funds, health care, and so on.  So the question to ask yourself when thinking about Colorado Foreclosures is that when World Com, Enron and Adelphia all committed billions of dollars in fraud to their investors, people were held accountable and some of these individuals were prosecuted.  So why is it that the Trillions not Billions that were lost in Mortgage Backed Securities not getting the attention that these companies had.  Just like Enron and World Com people were defrauded and many people lost their entire savings and retirement plans.  Yet because the guilty pool is so big no one wants to hold them accountable.  It’s sad and at this point I don’t have an answer, but Colorado Foreclosures will always be an issue when there are no measures to hold people accountable.  We at 1^st Metropolitan Mortgage are passionate about our client’s welfare and want to make sure that what ever loan you get into does not result in Colorado Foreclosures in the future.

Tags: Colorado Home Mortgage

This entry was posted on Friday, June 6th, 2008 at 4:21 pm and is filed under Colorado Home Mortgage. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.