With mounting foreclosures and rising unemployment, the State of Colorado has taken a number of actions against deceptive mortgage brokers and foreclosure rescue firms.

Colorado Attorney General John Suthers said his office began investigating numerous mortgage brokers and foreclosure rescue firms in late 2006 and early 2007, as the foreclosure crises reached its tipping point. Several of those investigations have recently concluded, the results of which are summarized below.

The state has reached settlements with several local mortgage firms, setting a new, statewide standard for truthful advertising of mortgage loans.  The companies, Denver’s Arbor Financial, Inc. and 5280 Financial Group, and Centennial-based Mortgage Toolbox, have agreed to settlements that will eliminate the deceptive use of teaser rates in mortgage loan advertisements.

Each of the three companies ran ads in the “Mortgage Marketplace” sections of the Denver Post and Rocky Mountain News, advertising low teaser rates and/or low minimum monthly payments associated with option ARM loans. Disclosures of true interest rates and other loan terms were buried in agate footnotes, if included at all. Several of the brokers interviewed during the course of these investigations remarked that these advertisements “made the phones ring.”

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The 2008 hurricane season came very close to presenting, on a large scale, the potential quandary caused by successive losses. On Sept.1, 2008, Hurricane Gustav came ashore and caused substantial damage from the Louisiana coast on inland, although not to the same degree as Hurricane Katrina. Barely a week later, Hurricane Ike entered the Gulf of Mexico with the possibility of following a similar track through Louisiana as that taken by Hurricane Gustav. Ultimately, Hurricane Ike came ashore on the Texas coast, causing severe damage to Galveston Island and its neighboring communities, through Houston and on north through the mid-western United States.

Had Ike followed Gustav’s path, it is a virtual certainty that the overwhelming majority of the damage caused by Hurricane Gustav would not have been repaired by the time of Ike’s arrival and much of it may well have been made substantially worse by Ike. If this situation of successive losses over a short period of time from successive hurricanes had occurred, adjusters would undoubtedly still have been forced to deal with the troublesome issue of whether damage was caused by wind or water.

But, among other potential unique issues, this situation would also present the possibility that insureds could effectively profit from their losses by attempting to require insurers to pay twice for damage that is repaired only once. In other words, the insured may argue that if their property was damaged in the first hurricane, the insurer must pay the cost to repair that damage, and then if there is additional damage from the second hurricane, the insured may argue that the insurer must pay the total cost of repair irrespective of the first hurricane.

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San Jose property owner Salvador Ruiz paid a company $8,950 to renegotiate the terms of his loans on two houses four months ago, but he says they did nothing and haven’t returned his money.

“They tell me everything’s OK, but they haven’t done anything so far,” said Ruiz, who is filing a complaint with the California Department of Real Estate.

With non-profits and banks overwhelmed by the demand for their services from people like Ruiz, an army of consultants has sprung up in San Jose and around the state offering homeowners help getting banks to modify their loans – for a price. Some of these businesses charge as much as $5,000 in advance, and many desperate homeowners, facing foreclosure, have been willing to pay.

But some customers are complaining little was done for their money, while a few services have turned out to be scams.

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Many homeowners are finding it increasingly difficult to afford the mortgage payments on the loans they have taken out in the last several years.

In some cases the rates have adjusted upwards drastically, in others household income has dropped. In some cases both have happened. In many cases the homeowner’s equity has dropped and to assure a quick sale the property is offered at a fire sale price.

This has resulted in a growing foreclosure crisis that in some areas of the country is claiming hundreds of homes per day. Here in Eagle County we have been fortunate that the rate is far below the national averages, but many people are struggling with their mortgage payments as the local economy slows.

Many lenders have established foreclosure workout programs that can include lowering the mortgage payment and/or spreading it over a longer term. The federal government has also called for uniform practices to streamline the modification of millions of loans.

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Imagine discovering your homeowners insurance is canceled while you are in the middle of selling your house to relocate. Or, imagine a situation where your job requires frequent travel and your insurance company pulls the plug on your insurance because it says your home is “unoccupied.”

Insurance Superintendent Eric Dinallo has acted to protect consumers who find themselves in situations like these. He advised insurance companies that canceling a homeowners policy only on the basis that a dwelling is unoccupied is an illegal mid-term cancellation.

Dinallo urged consumers encountering this issue to contact the Insurance Department. He said insurance companies must reinstate the policies of affected consumers. The action could potentially affect financially-pressed consumers involved in forfeitures.

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Eve Mazzarella was a Las Vegas success story. The high-school dropout and former housemaid moved to the Nevada city in 2000 from Seattle, got a certificate from the ABC Real Estate School and started selling houses in what would become the hottest market in the country. In 2006, Mazzarella recorded sales of $13.8 million and made the National Association of Realtors’ “30 Under 30″ list, which names the best young agents in the nation. Mazzarella started her own company, Distinctive Real Estate & Investments Inc., in December 2003. She whipped around town in a Mercedes-Benz sport utility vehicle. She planned to build a three-story office building in Vegas’s shabby downtown north of the Strip and preserve a historic house on the site by lifting it onto the roof.

Her competitors were impressed. “She was an up and comer with a brilliant future,” says Forrest Barbee, a broker at Prudential Americana Group, a Las Vegas agency where Mazzarella once worked.

The dream ended at about 5 a.m. on March 13, when federal agents smashed through the door of a stucco home on a quiet, grassy cul-de-sac looking for Mazzarella, 31, and her husband, Steven Grimm, 45, an erstwhile mortgage broker.

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State regulators Monday approved a 12.3 percent rate increase for the Texas Windstorm Insurance Association, marking the first time the state wind pool will raise rates more than 10 percent.

State law caps the association’s annual rate increases at 10 percent, but the state insurance commissioner can bypass the cap after catastrophic losses.

The association, which sells windstorm insurance in coastal counties and parts of Harris County to those who can’t find it in the private market, said it only needed a 10 percent increase on residential policies, but it didn’t include losses from hurricanes Dolly or Ike in its rate projections.

The Texas Department of Insurance didn’t include those losses in its projections either. Instead, regulators accounted for an increase in frequency of hurricanes to help shore up the association’s funding.

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Greed and naivete collided on Little Lake Street in the fall of 2004.

It produced easy money for specula-tors and mortgage brokers and short-lived happiness for families who bought houses they couldn’t afford to keep. Few streets in the county have witnessed as dramatic a turnaround as Little Lake.

Nestled in the heart of the sprawling Otay Ranch development in eastern Chula Vista, the new homes generated so much interest that people spent months on waiting lists, just for the option to buy.

Prices on one block peaked in 2005, a few months after homes hit the market.

Since then, 13 of the 23 houses – 57 percent – have fallen into fore-closure, making it one of the tightest concentrations in the county, according to a San Diego Union-Tribune analysis of MDA DataQuick information.

Little Lake Street is a microcosm of the South Bay’s imploding real estate market. One in seven foreclosures in the county has taken place in Chula Vista, double its share of the county’s housing stock.

Real estate experts say the flood of new, competitively priced homes in the area lured a dangerous mix: unsavvy home buyers and opportunistic brokers and lenders.

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Starting this month, the mail and inboxes of Colorado drivers will begin filling up with notices from their car insurance companies informing customers of a new “opt-out” requirement due to a new Colorado Law that takes effect January 1, 2009. Because many car insurance policy renewal notices are sent 60 days in advance, drivers whose coverage renews in January will start receiving revised premium notices – along with an optional rejection form, according to the Rocky Mountain Insurance Information Association. However, it’s important for all Colorado insurance consumers to understand how the legislation affects their insurance, the association advised.

Colorado Senate Bill 08-11 creates a mandatory opt-out of $5,000 in medical payments coverage (MPC). Medical payments coverage is currently optional auto insurance coverage that is offered in many different amounts – ranging from $1,000 to $100,000. This is extra coverage on the auto policy that pays for the driver and passenger(s)’s medical bills regardless of who causes the accident. If Coloradoans buy this coverage it is in addition to health insurance and settlement money from an at-fault driver.

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The governor’s $40 million program to refinance subprime mortgages has helped 60 homeowners who are struggling to make monthly payments and facing foreclosure, state officials said Wednesday.

In its first year, the CT Families program has refinanced $12 million in mortgages. There are another 130 loan applications now being considered, totaling nearly $27 million.

CT Families was first announced by Gov. M. Jodi Rell in December and initially came under criticism for being too narrow. It was later broadened, and two additional programs designed to help homeowners were added by the legislature.

Found here.