The Denver Post from Colorado. "Two years ago, Colorado issued a warrant to arrest Taiwan Lee, a state prisoner who had vanished on parole. He hadn't gone far. While police looked for him, he bought three houses at inflated prices in Arapahoe County with the help of lenders who put up the entire $1.9 million."

"After he was caught and jailed, he managed to buy two more. Until the foreclosures commenced, Lee owned five villas in an affluent gated community while living behind prison bars 150 miles away."

"In the Denver metro area alone, more than 1,000 homes sold for at least 110 percent of the original asking price in the 18 months ending in June, according to research."

"The Denver Post searched foreclosure records on 739 of these homes sold between January 2005 and April 2006. Already, 55 have been foreclosed, or one of every 13 homes, an extraordinary number even in a state where one of every 408 homes is in foreclosure."

"'It clearly is a problem,' said Colorado Attorney General John Suthers. 'We have been looking at house purchases over cost and money going back to the buyers.' Suthers' consumer protection chief, Jan Zavislan, said the office is investigating various participants in inflated sales, including buyers, sellers, appraisers, mortgage brokers, real estate agents and title companies."'

"We're looking at potentially every participant in these transactions,' Zavislan said. 'We're just seeing way too many of these things.'"

"Critics say mortgage companies have little incentive to ferret out inflated sales because they bundle and resell their home loans to Wall Street investors, taking their profits and diluting fraud losses in large pools of mortgage-backed bonds."

"These securities get 'sold in little pieces all over the world,' said Lou Barnes, a Colorado mortgage bank owner. 'It makes it very difficult to figure out who, if anyone, bears any responsibility for the flow of Colorado's foreclosures.'"

"Marc Loewenthal, a senior VP of New Century Financial Corp., says his company's mortgage subsidiary financed and resold loans on four of the allegedly fraudulent villa purchases. But 'the investor has the right to demand we repurchase the loan if there is fraud involved,' he said. 'We're at risk. We do have an interest in keeping fraud down.'"

"New Century grew concerned enough about fraud to install a new screening technology early this year, he said. As a result, 'we have stopped close to $1 billion in loans.'"

The Rocky Mountain News. "Prompted by local business leaders' concerns over the area's real estate market, economist Patty Silverstein has issued a report that says Denver's high foreclosure rate will continue, somewhat abated, into 2007."

"Residential foreclosures in metro Denver are on pace to hit a record high in 2006 of about 19,200. Through the third quarter, 14,132 foreclosure cases were opened in the seven-county region, a 34.2 percent increase over the January-September period in 2005."

"What's happening, Silverstein said, is a longer lag between the negative job-loss news and the foreclosures, when compared with Denver's problems in the 1980s. During the last great foreclosure boom, it was roughly two years between Colorado's job losses and its high foreclosures, Silverstein said. Colorado's recent job- loss peak, in 2002 and 2003, is now three to four years in the past."

"'Given the severity of it and the slow growth since then, we've had a longer lag,' she said."

"New or recently popular mortgage products also have played a role, Silverstein notes, and ARMs represent a disproportionate share of Colorado foreclosures: In the second quarter of 2006, 52.5 percent of the loans in foreclosure in Colorado were ARMs, compared with 35.7 percent nationally."

The Denver Post. "Despite solid growth in jobs, incomes and population, metro Denver's foreclosure rate is on track to hit 1.7 percent of all homes this year, according to an analysis. That rate is a midpoint between last year's 1.3 percent and a record 2.1 percent set in 1988, when an oil bust drove up unemployment levels and more people were leaving the metro area than moving in."

"The high foreclosure rate in Colorado, which has led the nation for the past seven months, is part of a downward trend in the overall housing market."

"Builder incentives and price cuts are putting pressure on the median prices of existing single-family homes, which fell 2.2 percent in the metro area and 2.5 percent nationally year-over- year for September. There were 31,450 unsold properties in the metro Denver market in September, compared with 27,248 a year earlier."

"For the past five years, home prices haven't appreciated in a 'foreclosure belt' stretching from Weld to Adams to Arapahoe County, said Lou Barnes, a mortgage banker in Boulder. Overbuilding has dampened price appreciation, which has contributed to high foreclosures in those areas because homeowners have less equity and aren't able to sell quickly, Barnes said."

"Economist Patricia Silverstein links the genesis of the current foreclosure cycle to the loss of 61,200 metro-area jobs in 2002 and 2003. Many workers had difficulty replacing the incomes they lost in the downturn and appear to have turned to higher-risk mortgage products such as no-money-down and adjustable-rate loans to stretch their finances."

"Broker Phil Heter, whose company only sells foreclosed homes on behalf of lenders and Fannie Mae, said that while there are huge differences between now and 1989, there appears to be no end to the number of foreclosed homes hitting the Denver-area market."

"'We were busy before, but it was like they just opened the faucet wide open 90 days ago,' Heter said."