The Denver Post reports from Colorado. "Brian and Selah Davenport were two days away from closing on a townhouse in Parker when their mortgage broker called on Valentine's Day. Their lender, Las Vegas-based Silver State Financial Services, one of the country's bigger subprime lenders, had ceased operations. That forced the couple, who were looking for a zero- down loan, to scramble to find another lender and save the purchase."

"'I didn't know a lender could shut down all of a sudden and there would be nothing for you as a consumer,' said Selah, who hopes to close Friday."

"Subprime loans accounted for 18 percent of all home mortgages in Colorado, compared with 13.6 percent of all home mortgages in the U.S., according to the Mortgage Bankers Association. At the end of the third quarter, nearly 13 percent of all subprime mortgages in the U.S. and 10.4 percent of subprime mortgages in Colorado were delinquent, according to the association."

"'You are starting to see the repercussions of bad decisions,' said Mike Thomas, managing partner with mortgage provider Hyperion Capital Group in Aurora. 'These lenders are having to eat these loans that they made on 100 percent financings.'"

"The solvent lenders still serving the market are setting aside large loss reserves and warning mortgage brokers that stricter loan-qualification guidelines are on the way. 'Their underwriting criteria are tightening and their price is going up,' said Chris Holbert, president of the Colorado Mortgage Lenders Association."

"One of the first products expected to disappear are zero- down mortgages, known as 80-20s, made without verification of income to borrowers with impaired credit ratings."

"Tim McDonald, who oversees subprime lending for a 10-state region on behalf of Wells Fargo, said most in the industry understood a day of reckoning was coming. But what has surprised him is how quickly some of the more reckless lenders have been forced out of business."

"'What is going to happen is that 25 percent to 30 percent of the subprime market is gone,' he said. Borrowers who took out riskier adjustable-rate and option ARM loans on spoken assurances that they could easily refinance in a year or two also need to be careful. That's because many of the mortgage brokers and lenders who made those promises may not be around."

The Pueblo Chieftain from Colorado. "So why does Pueblo have so many foreclosures? Pueblo County has the seventh highest foreclosure rate in Colorado, according to recent state statistics, and Colorado itself leads the nation in people starting to lose, or losing, their homes to foreclosure."

"And, gauging from January's foreclosure filings and the comments of Pueblo experts, this year is going to have even more. 'I think it's going to get worse before it gets better,' said Judith Lopez, head of the economic crimes unit at the Pueblo District Attorney's office."

"Rita Godfrey, a loan education specialist at Neighborworks of Pueblo, works with people facing foreclosure and said many of them had the adjustable-rate loans. 'Two years ago the interest rates were really low,' she said. 'Since it was at a bottom, the only way rates were going to go is pretty much up. People are starting to realize their mortgage payments are increasing more than $100 a month.'"

"Some of the foreclosure problem has been driven by fraud, misleading loan officers and complicit real state agents and appraisers. 'We still see it happening, to a degree,' said Pat Flanigan, supervisor of residential appraisals at the Pueblo County Assessor's office."

"Even without outright fraud, there is a lot of pressure on real estate professionals to find a way, any way, for someone who wants a home to buy one. Local appraiser Ivor Hill said there is no other way to explain why foreclosures are increasing when interest rates are still fairly low."

"'You have one or two real estate agents, you have a loan officer and an underwriter for a lender, you have a buyer and a seller, and all those people are dependent on that (house) sale closing to get paid,' he said."

"Kevin McCarthy of U.S. Bank said many buyers who used adjustable-rate loans also were borrowing as much as 100 percent of the cost of the home, plus other expenses. The cumulative effect is that the buyer has little or no equity, McCarthy said, little incentive to save the home and a huge-and-growing amount of money to pay off."

"'Anytime you borrow too much money it's harder to pay it back,' he said."

"Mortgage broker Sean McCarthy (no relation to Kevin) said part of the problem is that lenders set their lending requirements much too loosely during the last few years. 'You have a bit of a perfect storm,' McCarthy said. The industry is learning its lesson now, he said, but it will be a painful one, both for buyers and the lenders who lose money on each foreclosure."

"'The market is healing itself,' McCarthy said. 'But it takes a year or two of bloodletting.'"

Newszap.com reports from Arizona. "A report released earlier this month showing area real estate resale numbers at their lowest hits close to home for Pinal County resident Brian Schumann. He lives in the northern portion of Pinal County, just outside of Queen Creek and has had his house on the market since May 2006."

"'It wasn’t working with a Realtor. We had dropped the price so much,' he said." "The home is now on the market, for sale by owner, but there has not been too much interest shown. 'We have some people call,' Mr. Schumann said. 'Sometimes investors call, they want to know if that’s our lowest price.' He is not alone."

"Pinal County’s total home sale transactions reached 6,115 in 2005. The 2006 total dropped to 3,860. The median price for homes in Pinal County decreased as well; from $220,000 in the last quarter of 2005 down to $191,500 in 2006."

"'Each month has been a little bit lower,' said Jay Butler, director of Realty Studies. '(It has been) progressively going down from a year ago. Pinal (County) was such an aggressive market, it would be expected to come down,' Mr. Butler said."

"Real estate agent Bill Smith has experienced the downturn first hand. He works in the Queen Creek and Pinal County area and said the challenges for those looking to sell are many. 'I think a lot of it is that people who built in 2004-05, they may owe what the house is going to sell for right now,' he said. 'The market’s down right now and Pinal County has been hit.'"

"Besides not seeing the big profits from years ago, Pinal County sellers must compete with builders who can offer new homes with multiple incentives. 'They’re still building new homes,' Mr. Smith said. 'Some of them are considerably less than the same homes they built last year.'"

"'I’m seeing some of the properties on the market as long as a year,' said broker Bob Russell. He said the competition with builders is immense and has seen price reductions up to $90,000 with $40,000 in incentive packages."

"'It’s tough. People unrealistically are thinking their house is worth more than it is because they’re personally involved with it,' he said."

"Mr. Smith feels home sale prices in Pinal County have gotten as low as they can and also sees a rebound coming soon. His advice for now is to stick it out. 'Stay in it until 2008, because the market already is starting to show life,' he said."

"Mr. Butler is not so sure another boom is in on the horizon. He said the key aspect to the first housing explosion in the area had to do with a high number of investors looking for inexpensive properties. Those investors have since left the area, he said."

"'Pinal County was sold on affordability,' said Mr. Butler, adding the prices steadily increased, taking away one of the major incentives to buy in the area. 'You add to it, the not fully developed infrastructure … that just builds more issues for the housing market to deal with.'"