Home Foreclosures On The Rise

[Joseph Burkeson, CMI]

Home Foreclosures On The Rise
Weld County, Colo., Oct. 29, 2006 (CBS)

Weld County, Colorado, was one of the hottest housing markets in the country...until two years ago.

"At the very best, we're flat," real estate agent Matthew Revitte tells CBS News correspondent Sharon Alfonsi. "And we could be perhaps contracting."

Revitte sold many homes before oversupply and rising interest rates torpedoed the market.

"We've yet to hit bottom," he tells CBS News.

Homebuyers with adjustable rate mortgages faced payments they couldn't afford. Those forced to sell couldn't find buyers and hundreds defaulted on their loans. Now the place leads the nation in foreclosures – 1 in every 168 households. That's 700 percent higher than the national average.

"Almost overnight it's like somebody turned the lights off," Revitte tells Alfonsi. "Now we are going through the great correction."

According to a new report, they're not alone. Nationwide, more than 300,000 properties entered foreclosure during the 3rd quarter — up 43 percent from a year ago.

"Somewhere between 1.2 and 1.3 million properties will end up in some state of foreclosure over the course of 2006," says Rick Sharga of RealtyTrac, a properties listing company.

Things are so bad in Colorado that the state just set up a first-of-its-kind foreclosure help hotline. It got 1,400 calls on the first day.

"There's north of a trillion dollars in adjustable rate mortgages that are going to reset over the next 15 months," says Sharga. "And what that means for the average homeowner is an increase of between 20 and 50 percent of their monthly mortgage bill."

That's expected to sink thousands of homeowners who bought into the boom with no down payment and risky financing like interest-only loans.

Margaret Hernandez lived in Weld County for five years. Recently, she returned for the first time since she foreclosed in April.

"I can hear my kids," she recalls as she breaks down crying. "I can hear my kids talking and just hearing them playing and talking and eating and everything else...it's hard."

While the emotional toll of foreclosure is personal, the financial impact is shared. You can expect your home value to drop $10,000 or more if a neighbor defaults.

"I don't think the circumstances here in Weld County are that unique to what perhaps could happen in the rest of the country," says Revitte.

Experts CBS News spoke to agree: predicting foreclosures will climb through – at least – the end of next year, forcing many more people like Margaret Hernandez to start over again.

"I really tried hard to keep it and I think will take an eternity to own again but I'm gonna work hard at it – the Lord has to bless me some how again," says Hernandez.

Colorado, Nevada and Florida now have the highest foreclosure rates, while the number of foreclosures in California have tripled since the last year.

[wforsyth]

It's certainly a devastating experience and one that the mortgage lenders who assisted in this travesty will certainly share responsibility for.

[Emmanuel J. Scanlan]

Have not seen the September statistics but in August, North Texas experienced over 10,000 foreclosures. Almost all of that was in the Dallas/Fort Worth Metroplex.

At the same time the foreclosures are increasing I have seen three new mortgage gimmicks started that are basic variations of the 80/15/5, ARM with interest only payments, etc. It really is sad to see so much default because of these gimmick mortgages being pushed.

[James H. Bushart]

Originally Posted by escanlan

Have not seen the September statistics but in August, North Texas experienced over 10,000 foreclosures. Almost all of that was in the Dallas/Fort Worth Metroplex.

At the same time the foreclosures are increasing I have seen three new mortgage gimmicks started that are basic variations of the 80/15/5, ARM with interest only payments, etc. It really is sad to see so much default because of these gimmick mortgages being pushed.

When the elections are over and news of the war no longer assists the political agenda...these foreclosures will certainly become the next big headline.

[lcapaul]

Originally Posted by wforsyth

It's certainly a devastating experience and one that the mortgage lenders who assisted in this travesty will certainly share responsibility for.

Wendy,

How can you be so Republican, yet sound so Democrat. When people buy things that they cannot affor, that is their responsibility, not the Lenders. When people with a $35 - $40K annual Income buy houses priced at $475K on a Minimum ARM where they pay $960/mos....not even close to even the Interest Payment....why is it the Lenders fault when the purcahser cannot meet the Terms of the Mortgage? Stupid people do Stupid things, its their fault not someone elses....but then your views do reflect the policy of the New Republcans....its always someone elses fault....never theirs

[Joseph Burkeson, CMI]

Lewis,

I can see your point but these types of mortgages were never intended to be used for long-term financing, they were designed for investors. Its kinda like drugs, Novocain is a good pain killer, cocaine is a plague on society. We protect people from cocaine and prosecute those who push it. IMHO these mortgages that do not reduce principal are a plague on the home mortgage market and we need to protect the credit junkies from themselves.

Owning a home is not an entitlement, if anything we should restrict mortgages only to people who can put down a minimum of 25% cash, have the payments be 25% or less of gross monthly income and cover all closing costs, then we would have a stable housing market much like it was post WWII till the mid-70's.

[lcapaul]

Originally Posted by jbushart

When the elections are over and news of the war no longer assists the political agenda...these foreclosures will certainly become the next big headline.

Things are just going to get worse after the first of the year, no matter who wins next Tuesday. With the Housing Market declining and Prices following many of the ARM's that have been used duing the past couple of years are going to 'mature" and reach their Cap much sooner than expected, especially the very Creative ARM's like the Minimum ARM.

Many of you may have been familiar with the extent to which these Minimum Arms have been used, I really didn't notice until I was in Vegas for the ITA Expo. Looking at Real Estate MAgazines and talking to a couple of Realtor Friends there, I couldn't believe the way they were being pushed .........Zero Down, or $1500 Down and payment of Only $960 a Month, Min Arm.....sounds okay until you look at the price of $480.000.........Getting Something for Nothing, To Good to Be True.....they both fit the Idea of the Min ARM program......when the Min ARMs Cap Out, which they are beginning to do in Vegas and other areas, the $960 payment are going to hit $3200 or more.....

I may take up an Offer to move back to Vegas and take over a Property Management Company, my bet is that there is going to be a Big increase in Homes for lease down there.....but its hard to give up North Idaho for Vegas

[wforsyth]

Originally Posted by lcapaul

Wendy,

How can you be so Republican, yet sound so Democrat. When people buy things that they cannot affor, that is their responsibility, not the Lenders. When people with a $35 - $40K annual Income buy houses priced at $475K on a Minimum ARM where they pay $960/mos....not even close to even the Interest Payment....why is it the Lenders fault when the purcahser cannot meet the Terms of the Mortgage? Stupid people do Stupid things, its their fault not someone elses....but then your views do reflect the policy of the New Republcans....its always someone elses fault....never theirs

No, I agree with you that it is the individual's responsibility. However, it is unethical of some mortgage lenders to advertise the way they do and offer a supposed "panacea" of answers to all ills.

I'm VERY conservative, however not necessarily republican. Still love Reagan though!

[wforsyth]

And I was responding initially from having my home foreclosed on me. Not because I got in over my head, but having an unethical couple use the sale of my home to complete a 1031 to avoid paying taxes on another house and then take my home away from me.

[lcapaul]

Originally Posted by wforsyth

And I was responding initially from having my home foreclosed on me. Not because I got in over my head, but having an unethical couple use the sale of my home to complete a 1031 to avoid paying taxes on another house and then take my home away from me.

Like I said, its always someone else's fault. From you previous explanation of your foreclosure you said you signed a Mortgage with the same people who tried to screw you when you had a Lease Option, your experiences during the lease should have warned you what was to come, yet you signed a mortgage with the same people.....in my view you bare much of the blame for what happened.....

In the case of these Min Arms, why would people enter an agreement to purchase a Home that they couldn't come close to affording, and why should anyone feel sorry for them when the Mortgage Company Forecloses , the terms were all laid out in the Mortgage and they had to sign a disclaimer explaining the Terms of the ARM......

If you read the Fine Print in most mortgages you'll see that the mortgage company does not have to accept a Late Payment even if they quote a late payment fee, most mortgages will specify a certain amount of time before the Payment is late, and it will say right in the contract at such time as the Mortgage payment is late the loan is in default and full payment of the Balance can be demanded.....its up to the Mortgange company when they begin foreclosure

[wforsyth]

Originally Posted by lcapaul

Like I said, its always someone else's fault. From you previous explanation of your foreclosure you said you signed a Mortgage with the same people who tried to screw you when you had a Lease Option, your experiences during the lease should have warned you what was to come, yet you signed a mortgage with the same people.....in my view you bare much of the blame for what happened.....

In the case of these Min Arms, why would people enter an agreement to purchase a Home that they couldn't come close to affording, and why should anyone feel sorry for them when the Mortgage Company Forecloses , the terms were all laid out in the Mortgage and they had to sign a disclaimer explaining the Terms of the ARM......

If you read the Fine Print in most mortgages you'll see that the mortgage company does not have to accept a Late Payment even if they quote a late payment fee, most mortgages will specify a certain amount of time before the Payment is late, and it will say right in the contract at such time as the Mortgage payment is late the loan is in default and full payment of the Balance can be demanded.....its up to the Mortgange company when they begin foreclosure

No, you misunderstood the first explaination. They were all cream and sugar during the lease. As soon as I signed the mortgage they got nasty.

I don't blame other people for my problems. I do hold them accountable for the crap they dish out.

I never had a late payment Lewis.

[lcapaul]

No, you misunderstood the first explaination. They were all cream and sugar during the lease. As soon as I signed the mortgage they got nasty.>>>

Many of us misunderstand your "first explanations" Wendy, seeing how the later ones are often so much different than the first

[wforsyth]

Not true.

Many people put their fingers in the pot so to speak and "interpreted and passed on" my explainations until nobody could tell what was what. I've never changed my story from beginning to end.

If people would only listen to the person something happened to, there wouldn't be any confusion.