Record Number of Foreclosures on the Horizon

I really haven't looked too much at the charts on mortgage applications. Just didn't think there was enough there to report that was new and exciting. So, since we're all sitting around for Ben to do his thing... or do nothing, for that matter, I figured I would put these charts together.

And lo, and behold, wouldn't you know it.... there seems to be a bottoming in the applications numbers.

Here's a quick chart on the overall applications for mortgages over the past two years:

Looking at the REFI index chart, that's where the move up lies in the overall number. Americans are refinancing their mortgages. I'm betting that anyone with one of those exotic mortgages, that are now exotically expensive, may be the ones ceding to the less than scrupulous mortgage lenders.

I read an article over the weekend via the Denver Post that I believe was on the front page. In it, the real estate situation in Denver was evaluated. The number of homes normally for sale in the Mile High City is around 4k. Right now, there are about 33k homes for sale.

Isn't it ironic that mortgages starts with mort... the latin word for death?

The article was interesting because they interviewed two compelling sides of the transaction in a mortgage application, the applicant and the broker. The applicants, who are now the holders of these mortgages, were given 100% financing. What has happened is that a lot of the applicants are now in foreclosure, and represent about 70% of the foreclosures that are occurring in Denver. Colorado Mortgage Lenders Association president Chris Holbert had this to say:

"There are very few people who have 5 or 10 or 20 percent cash to put down. Or if they do, who want to. If you want 100 percent financing, and you qualify, can they turn you down because it's not a good idea?"

I can see the dilemma on their part. Who are brokers to want to turn away business just because later there is going to be problems.... Except of course brokers who want to stay in business for a long time. I can also see regulation on the horizon. Who better to help out the consumers than the individuals who borrow more money from more institutions from all over the world than the U.S. government. They have years and years of experience in going into hock to lean on for sage advice. I'm sure that we'll be seeing something on the horizon with what appears to be record numbers of foreclosures looming.