California foreclosures hit 4-year high

California foreclosures hit 4-year high
By JENNIFER HUFFMAN
Register Business Writer
Wednesday, October 25, 2006 7:22 AM PDT
Residential foreclosure activity in California reached its highest level in more than four years in the third quarter, reported real estate data company DataQuick Information Systems, but Napa lenders report more encouraging news.

Lending institutions sent 26,705 default notices to homeowners in the state during the three-month period ending in September, DataQuick announced, which was the highest number since 2002. That was up 28.3 percent from 20,812 for the prior quarter, and up 111.8 percent from 12,606 for 2005’s third quarter, according to the announcement.

“We’re not getting a lot of calls from existing WaMu loan holders about foreclosures,” said Michael Madsen, a senior loan consultant at the Madsen-Shaw Home Loans Group at the Washington Mutual home loan center in Napa.

“I think the foreclosures that will happen will be those people who took out 100 percent financing loans over the last two years,” said Madsen.





“They bought with no money down and then today the houses are worth the same or less than when they purchased, and so there’s no room to refinance into a more favorable loan product. When the payment adjusts upwards there’s nowhere for them to go. The equity isn’t there. That’s where you are going to see the squeeze.”

Local real estate seems to be holding, said Madsen. “The market is not tanking in Napa County.”

Mortgage consultant Bernie Peacock works for Investors Trust Mortgage Corporation on Jefferson Street.

“We are seeing an increase in notice of defaults, ... once you have received (the notice), you have 90 days to solve your situation,” said Peacock. “We are seeing a trend of more consumers struggling but not necessarily ending in foreclosure. The market has been strong enough that people tend to sell the house or refinance.”

People are still seeking out mortgages, he said.

“We are still seeing reasonably strong demand for mortgages,” but adjustable rate mortgages, are “less popular,” he said. “(Fewer) people are taking out deferred interest loans. Which is probably a positive thing for the industry. When you get a rising mortgage balance but a declining home value, that’s when people potentially get into trouble.

“Right now, a lot people are trying to get a fixed rate. Or at least a five-year fixed rate.”

It’s hard to generalize recommendations, for buyers, said Peacock. “I try and consult people and look at their entire situation. Some investors are more sophisticated and know how to use an ARM (adjustable rate mortgage) and it may still be a good loan for them. One loan does not fit all.

“We’re seeing a lot of people sitting on the fence, (thinking) that prices will come down. I don’t know if that’s the right decision or not.”

Martha Pedroza-Ramos, Loan Consultant with Cal-Bay Mortgage Group in Napa said she is also seeing a small increase in default notices.

“A lot of the people that got in recently were speculators, and I believe those are some of the people that are receiving notices of default,” she said. “Some negative amortization loans on 100 percent financing that are not appropriate for all clientele.”

New twists on traditional mortgages are emerging.

“These days long-term 10-year interest- only products are very popular,” said Pedroza-Ramos. “They secure the rate over the 30-year term with no prepayment penalties on the loan, giving the client the option of the interest only payment for the long term.”

Talk of foreclosures doesn’t seem to be scaring away Cal-Bay customers.

“We’re still very busy,” Pedroza-Ramos said. “If clients get into good loans, they will have taken a good investment strategy in the long run.”

“There’s certain percentage of foreclosures (usually) expected. I’m not seeing that percentage a lot higher than normal,” said Kevin O’Neill, branch sales manager, at Countrywide Home Loans.

“Are foreclosures up over last year? Yes. Are they up over all time highs? No, they’re not even close. The market’s really not that bad,” he said. “People that are in foreclosure are generally people that shouldn’t have gotten a loan in the first place; they were approved for something they couldn’t qualify for. You have to really look at what you can afford.

“I don’t think we are going to see a high rise in foreclosures (in Napa County). I think most will be sold or worked out.

“I believe there’s been a large overreaction to the marketplace this year and I feel the price of homes will stabilize and not reduce that much.”

Statewide, the annual rate of home-price increases hit a high of 22.8 percent during second-quarter 2004. Since then, price appreciation cooled to 3.7 percent last quarter.

There are 7.81 million houses and condos in the state, DataQuick reported. “While foreclosure properties tugged property values down by almost 10 percent in some areas nine years ago, the effect on today’s market is negligible.”

 

URL please?

 

http://www.1loansusa.com/realestatenews/10_18_06/news9356.html

 

You never see these stories mention the % of homeowners in default.

If foreclosures go from 1 last year to 2 this year that would be a 50% increase in foreclosures, but does it tell you anything? NO

I'm not saying 26k defaults is not news but I wonder what percentage of homeowners that is. If there are 2.6M homeowners your only talking about 1% I would imagine there are many more homeowners in Ca than that.

 

Get ready to watch that number EXPLODE higher... my two cents

There are hundreds of homes on the verge of default where I live.

 

that would be a 100% increase

 

You got me. :eek:

what i was saying is that the numbers of foreclosures are going to have to increase in percentage terms to really effect the market. hundreds are of little consequence when we're talking about millions of homeowners.

 

just my opinion.. this was all done by design. and yes, the number is def. gonna explode!
and the people behind it know perfectly well what there doing...

they'll be a new defintion to the phrase:
"the ends will justify the means"

and i'm talking in a couple a years when most of society will be on the balls of there ass and the people in charge will sit back and rejoice in there efforts to control "the world".

now mind you.. this is only one part to a more sinister plan thats been ineffect for some time now...but when u factor this in with all the other historic events that are going on...the way there's a profound increase in every catagory.. ex. people dying from diseases, soldiers dying, drug/alcohol

one has to think to himself, and ask... when are we ever going to fuckin wake up and smell the fuckin coffee!!

 

http://www.minyanville.com/

 

I won't hit on the conspiracy theory, but, you think the new bankruptcy laws were passed to benefit all those over their heads in debt new home owners...

Come on now!