Along with many states throughout the country, Colorado is setting new foreclosure records. Let's see what Colorado officials blame for this crisis and how they plan to keep it from happening in the future.
The mortgage meltdown has hit Colorado hard, so hard that the officials at the state capitol are calling it an “epidemic”. After the first nine months of 2007 Colorado had already set a new foreclosure filing record with over twenty-eight thousand nine hundred, which is four hundred more foreclosures throughout the year of 2006. The projected number of foreclosures for the year of 2007 is thirty-seven thousand.
Much of blame for foreclosures in Colorado, and throughout much of the nation, falls on adjustable rate mortgages that carry a pre-payment penalty. With the values of home declining and adjustable rate mortgages set to adjust homeowners with a pre-payment penalty are forced to come up with tens of thousands of dollars to refinance, make an outrageous mortgage payment or face foreclosure.
This year Colorado legislators passed numerous laws regulating mortgage practices, including an emergency rule on pre-payment penalties. The new rule prohibits pre-payment penalties extending past the fixed portion of an adjustable rate mortgage. This may be good news for those seeking a new mortgage, but it is a little to late for those facing an interest rate increase with a pre-payment penalty that extends past the fixed rate portion of the mortgage.
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