Rate hike fallout | SummitDaily.com

Rate hike fallout

DUFFY HAYESsummit daily news

SUMMIT COUNTY – It seems that all the recent interest rate hikes, buyers’ massive credit card debt, and the run-up in creative mortgage sales are all catching up to Colorado.A recent report by RealtyTrac Inc. of Irvine, Calif., revealed that Colorado led the nation in the number of foreclosures per household in both March and April. A total of 3,706 Colorado homes were in some stage of foreclosure in April, or one out of every 494 state households. That’s well above the national average of one of every 1,268.While the report broadly paints the entire state of Colorado with the welcher brush, Summit County isn’t a major contributor to the statewide growth in foreclosures, according to longtime county treasurer Larry Gilliland.”We don’t have the same kind of issues that they have on the Front Range,” he said.Those issues that metro areas are grappling with include: many more adjustable rate mortgages that are on their way higher due to Federal rate increases, a glut of unsold homes, a high number of mortgages purchased with no down payments, as well as an increasing number of buyers who are purchasing homes despite massive credit card debt.As a real estate market now dominated by second-home owners, Summit County doesn’t feel the quite the impact of these larger market forces.”With the majority of our loans, you’ve got people from other states, if not other countries, that have other sources of income. Most of the people aren’t running into trouble,” said Kevin Berkley, owner of Mountain Resort Mortgage in Breckenridge.”But we are definitely watching what’s going on with these adjustable rate mortgages,” he said. “If people were barely scraping by before, and now their payment goes up substantially, that could put them in trouble.”But here in vacation-land, most mortgages are written on purchases of a second home, so the number of defaulted home loans obviously doesn’t reflect the trends statewide. In the latest second-home study from the Northwest Colorado Council of Governments, they estimated that a full 67 percent of housing units in Summit County were second homes. That was the highest rate of the four-county region studied, including Eagle, Pitkin and Grand counties.Summit County, though less impacted, definitely has felt the effects of a less friendly mortgage loan environment, according to Gilliland. He reports a swift increase in the number of foreclosures countywide from the fourth quarter of 2005 through the first quarter of 2006. In the first quarter this year, his office reported 27 starts of the foreclosure process versus just 18 during the same period in 2005. There was a jump at the end of 2005 as well, when his office reported starting 29 foreclosures.That said, Gilliland said he’s seen a slowdown to just a few foreclosures started to begin the second quarter of this year. “Things have really slowed down since the end of the first quarter,” he said, though he couldn’t pin down specific reasons why.State lawmakers are working at ways to alleviate the pressures on the mortgage market, crafting a number of potential laws for Gov. Owens’ signature.Owens, a former state treasurer himself, signed a new law Tuesday that increases the fines for mortgage fraud, gives the state attorney general better jurisdiction over the industry, and implements additional safeguards from predatory lending.Another bill awaiting Owens’ signature creates a longer timeframe for loan holders who are behind on their payments to “cure” the loan, giving them more time to catch up on loans they’ve fallen behind in paying.Duffy Hayes can be reached at (970) 668-4621, or at dhayes@summitdaily.com.Mortgage risk Q&AQ: What should I do if I can’t pay my mortgage?A: First, lenders understand hardship and are eager to help. Most lenders do not benefit if a home goes into foreclosure. Second, you want to take an active role in protecting what’s yours.Q: What specific steps should I take if I’m in danger of getting behind?A: At the first sign of trouble, pick up the phone and call the lender. Do not put off calling … putting it off makes it more likely you’ll lose your home. By contacting the lender, you’ll learn your options. The lender may be able to lower your payment, or even suspend the loan awhile. The lender may also be able to permanently change the loan, or even advance you the money to bring loan payments up to date.Source: Countrywide Financial CorporationSummit County, Colorado

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