[mikejr]

I specialize in marketing foreclosures in the western PA area and the foreclosure rate keeps climbing. We've gotten the attention from investors from all over the country buying up the foreclosures in the area. In general foreclosures are up all over the country.

From what we can see the high foreclosure rates are due to very liberal lending guidelines on the prime and subprime origination market. Normally the foreclosures (f/c) are in the bad neighborhood and in the low value properties. In the past 12 months we've seen more high end homes coming into f/c and onto the market.

Many of the high end f/c are interest only and ARM loan products which tend to have increasing payments.

I've seen people getting loans to buy houses that couldnt afford to buy a stick of gum on time. These same people never make a single payment and go into f/c in months.

Sure there are other reasons for f/c that include job layoffs, declining values in the area, death or illness of a spouse etc... but in my opinion its the lenders themselves that are to blame for lending money to people that dont have the ability to repay it. I've seen origination appraisals that appraised a home worth $30K at nearly $100K just to make the loan work.

We've seen loans with silent 2nd mortgages that fraudulently induce the primary lender into the loan thinking they have an 80% LTV when in fact they are in a 100% LTV position since that 2nd mortgage is never recorded and is bogus.

This commentary is not meant to attack anyone in the lending industry, but merely my observation of the state of the f/c industry in the US.