Since Colorado is still leading the in foreclosures, I decided to do a little digging as to why. The economy is doing pretty well here in the Rockies. Our unemployment rate closely mirrors the national average. Median incomes, and property values outpace the nation as well. Certainly, there are other places in the nation that outperform Colorado. But the states economic data really doesn’t reveal why we’d lead the nation in foreclosures for seven straight months.
One reason why it’s hard to quantify is that the foreclosure rate isn’t really that high. Yes it’s way up from a year ago, but “a year ago” represented a very low rate to start with. The current high rate in Colorado is 1 foreclosure for every 400 households, or about one quarter of one percent. It doesn’t take very many loans to go south for this number to change quite a bit.
After talking with a few different lenders though, I think the real reason has less to do with exotic loans and more to do with Carlton Sheets. For those unfamiliar with Mr. Sheets, he pioneered the “no money down” real estate investment strategery that has been copied by hordes of real estate investment “gurus”, that are all happy to tell folks with insomnia about a way to make millions without investing a dime. Well, except for the dime they want for the class. anyway, the basics are to buy investment homes, rent them, fix them, or just flip them, and then spend your days in Caribbean. It’s not quite working out for some folks, as my anecdotal poll of three lenders here in Denver placed non-owner occupied loans at over half of all foreclosures. Apparently Carleton never covered finicky real estate markets, unreliable renters and construction overruns.
However, not every investor with a foreclosure pending is surprised to be where they are. Many folks went into the process knowing full well that they were never going to pay on the loan long term. It’s impossible to tell just how many of these straw buyer type deals count towards the foreclosure rate, but it’s not a rarity. Indeed, many of the so called victims of Colorado’s leading foreclosure rates are laughing all the way to the bank.
Mortgage Industry Professionals. Like what you see?
SUBSCRIBE for free by RSS or email, and never miss a post!
{ 1 comment… read it below or add one }
I heard of a guy who gained a lot of equity, in Phoenix, I think, and he ended up skimming all the equity out and went back to Mexico.
I know what he did was dishonest, but somehow I think the idiot lender got what he deserved.
Leave a Comment