Hopes About Foreclosure Crisis

Posted on August 22, 2008
Filed Under Foreclosure Homes |

Declining default notices are given rise to hopes that the foreclosure crisis is tapering off. Maybe it is too early to celebrate with this straw of hope.

The first step in the judicial process of foreclosure is the notice of default. For the third running month default notices have declined according to ForeclosureRadar, a site that notes daily auction notices on the Internet. The NOD fell by 4.6% counting to 40,219 foreclosure postings. It calculated to loans worth $17.7 billion.

Despite the slowing down of default notices, foreclosure auction continued to spike. On each working day 1,300 houses were dragged to auction courts. In 2007 the number was 415 on each day. Notice of trustee sales is issued 105 days after default notices to the borrowers. This jumped by 9.8% in July counting to 39,010 foreclosure filings.

On the other hand less and less borrowers receiving foreclosure notices have been able to get out of it and save the houses that are their homes. The numbers heading to lose their houses are double that of what it was few months ago – in February this year.

San Joaquin County has been for quite some time the centre of foreclosure stress and sales. Foreclosures spiked by 10% in July from June this year. In the last one-year foreclosure sales have gone up by 204%. What is happening in San Joaquin mirrors what is happening in the entire state of California. At the root are sub-prime mortgages that reset to higher interest rates after the initial teaser rates. Thousands could not cope with this increase and succumbed to foreclosures. Coupled with this came unemployment and swelling of food and fuel prices. There was nothing at the end of the road but foreclosure for the hapless borrower.

The sale of houses has been increasing in the county. In Stockton 80% of the houses come from the foreclosure category. Lenders are offering impossible discounts. Houses are selling at absurdly low prices and investors are snapping up the bulk. In San Joaquin County 45% discount is being offered while the average discount across the state is 33%.

Experts opine that until and unless the real estate market is cleared of foreclosed houses the situation will not get a chance to normalize. The astounding fact is that 91% of the foreclosure troubles came from one company – Countrywide Financial.