Wednesday, March 30, 2005

Metro mortgage defaults on rise

Experts blame bad lending and borrowing decisions, lagging income growth and flat home prices.
By Christine Tatum
Denver Post Staff Writer

Soaring foreclosure filings in Arapahoe County for the first three months of this year helped drive metro Denver's foreclosure rate 34 percent higher than the same period of last year and 30 percent higher than the fourth quarter of 2004.

The seven-county region's ballooning rates stem from bad borrowing and lending decisions, lagging income growth and flat home prices, experts say.

It's hard to continue blaming foreclosures only on the economy. Colorado added 27,900 jobs last year, and the state's unemployment rate dropped in January to 4.9 percent, the lowest level since September 2001.

"Lenders started giving money to people, and it's gotten out of hand," said Jeannie Reeser, public trustee of Adams County. "I am talking to people who have jobs, but their income doesn't come anywhere close to matching their financing."

Arapahoe County Public Trustee Mary Wenke expresses similar frustrations. First-quarter foreclosure filings in that county came in at 1,629, topping the other counties substantially. The rate represents 1.3 percent of 125,325 single-family, owner-occupied houses in the county, according to 2003 census records.

Arapahoe County's most recent quarterly filing rate is more than double the 757 foreclosures posted in the fourth quarter of last year. The county had the dubious distinction of posting the greatest rise in foreclosures last year - a 39 percent spike over 2003.

Wenke said most of the foreclosures her office is handling are tied to loans less than a year and a half old. Eighty percent of the county's foreclosures occurred in Aurora.

"I am not in a position to say it's faulty lending, but we have too many foreclosures that are on brand-new loans not to conclude that something is wrong," she said.

Pete Lansing, president of Denver mortgage company Universal Lending Corp., agrees that some lenders are too lax. But Lansing said many people could afford their home loans if they were smarter about managing other expenses.

"Everybody has to have what they want right now, no waiting, no saving up," he said. "Credit is so loose today that I can buy the groceries I need on a credit card, eat the food tonight, discard the food by tomorrow at noon and finance my debt on a 30-year, amortized loan. How stupid is that? But people do it all the time - and then they wonder why they're in foreclosure."