The US News and World Report looks at Colorado. "In pursuing the American dream, Hector Garcia figured he was doing everything right. He bought his first house 4 1/2 years ago in Denver's Montbello neighborhood. Garcia took out a 30-year, fixed-rate mortgage at 6.5 percent interest, bought a three-bedroom home for $207,000, and began fixing it up."

"But two years ago, interest rates reversed course, sales slowed, and developers began discounting the homes they'd built nearby. Buyers with adjustable-rate loans saw their monthly payments rise. Some fell behind and were forced to sell or face foreclosure."

"The worst result is the sort of vicious cycle of 'for sale' signs, foreclosures, then more 'for sale' signs that is all but devastating Montbello. Bank-owned properties now represent more than 80 percent of all homes on the market there, putting even seemingly stable homeowners like Garcia up against a financial wall."

"'I just can't take it anymore,' he says of his street's overgrown yards, abandoned houses, and declining property values. 'I put so much into this house and this community, but I don't have no equity.'"

"Garcia's house two years ago 'would have gone for $210,000, maybe more,' says David Cabrera, the real-estate agent whom Garcia hired last fall to sell the home, now priced at $195,500. 'But nobody's buying now with all the foreclosures.'"

"Denver City Council President Michael Hancock Hancock is considering a 'second chance' program in which an investor group would buy foreclosed properties in bulk, rent them back, and eventually sell them to those who have been foreclosed on."

"Some worry, however, that such a plan would only set folks up for another fall. 'Homeownership has been sold to many people as the equivalent of a Powerball ticket,' says Jacky Morales-Ferrand, who directs the city's housing development division. 'But the truth is that not everyone can afford a home when the roof needs to be fixed or the plumbing breaks. Most of us won't win that Powerball ticket.'"

"Some expect things to turn around eventually. That's not likely to be soon enough for Garcia, who has yet to receive an offer. '"I feel bad,' he says. 'Everyone thinks they want to get a house to get money for the family. But I need to have a life, too.'"

A report from from the Arizona Republic. "Regulators have shut down Mesa-based Eagle First Mortgage and its more than 75 Valley branches, citing illegal lending practices. The Arizona Department of Financial Institutions pulled the license of the mortgage firm and its broker, David Sanchez, last week. Regulators described more than 100 illegal money transactions, loan activities and hiring practices."

"A wave of mortgage fraud started spreading across the Valley last year that could cost lenders millions of dollars and erode values and confidence in Arizona's real estate market and economy."

"Most of the fraud is coming from cash-back deals that involve obtaining a mortgage for more than a home is worth and pocketing the extra money. But there are other types of fraud such as faking and forging documents and lying about income and other personal information for loans."

"Chris Mozilo, president of the Arizona Mortgage Lenders Association, could not comment on the Eagle First case because he did not know the details. But he said the Department of Financial Institutions is doing a good job with limited resources 'cleaning out the bad actors' in the mortgage business."

"As part of the department's investigation, Eagle First agreed last month not to take on new business. A statement on the firm's Web site, last updated in January, said nothing of its closing. The site says, 'We successfully finance 98 percent of our applicants.'"

"A consent order from the Arizona Department of Financial Institutions cites reasons for shutting down Eagle First including: It made almost $2.5 million in payments to unlicensed mortgage firms and contractors that were owned by its own branch managers, which is against the rules for licensed mortgage brokerages."

"For example, it paid $418,646 to CM Vermex mortgage owned by the manager of one of its branches and $373,100 to Casa Latino Mortgage owned by the manager of another branch."

"A $19,000 payment was made to an employee of Scottsdale Title, but there was no invoice for it. Employees were paid as both real estate agents and mortgage brokers without disclosing their dual roles and multiple commissions."

"Failed to check to see if 95 employees had felony convictions. Such a check is required by licensed mortgage brokers. The brokerage let borrowers sign documents when key information and disclosures were blank."

"A false statement or misrepresentation was made. For example, a manager of an Eagle First branch took a loan application last February that listed the borrower's monthly salary at $2,860. A month later, she took another loan application from the same person and listed the salary at $4,959."