Foreclosure Filings are Going Through The Roof
by John Occhi, Hemet-San Jacinto CA REALTOR
Hemet - San Jacinto Real Estate
It is no secret that the local real estate market in the Hemet - San Jacinto Valley is starting to be dominated by the bank foreclosure market. It seems everywhere you turn, you see foreclosure home after foreclosure home where the landscaping has died off and become a weed field.
Unfortunately these foreclosure properties are not just being found in Hemet CA. No, every where I drive in South West Riverside County shows the same signs of bank foreclosure properties everywhere. The Temecula - Murrieta area is plagued with foreclosure homes for sale as well as the rest of Riverside County, the Inland Empire and all of Southern California.
The problem is not focused on any one social-economic group either. There are low end homes in the $200,000 range that are being lost to the banks in foreclosure as well multi-million dollar properties in some of the most exclusive areas of California have foreclosure homes for sale.
Irvine, CA based RealtyTrac is a national service that monitors real estate trends. RealtyTrac specializes in information on foreclosures and pre foreclosures properties and regularly makes their findings available to the media.
RealtyTrac just released it's "U.S. Foreclosure Market Report" for last month - May 2007. They say that more than 176,000 homeowners received the dreaded Notice of Default (NOD) in May. This means that last month alone, 1 in 656 homes across America went into foreclosure. These pre-foreclosure numbers represent the highest numbers they have recorded in their monthly report - ever. Looking back to a year ago, we now have 90% more foreclosure loans.
"Foreclosure activity roared back with a vengeance in May," said James Saccacio, CEO of RealtyTrac in a release accompanying the data, "Such strong activity in the midst of the typical spring buying season could foreshadow even higher foreclosure levels later in the year...foreclosed properties are becoming more commonplace and adding to the downward pressure on home prices in many areas".
There are a number of reasons why we are seeing the real estate foreclosure actions now. One is fraud. Many unscrupulous individuals and companies created a lot of phony documents to pass off as legitimate so that unsuspecting buyers and investors could purchase property. With the run-a-way appreciation we experienced in the past few years, many novice real estate investors were taken advantage of in a multiple number of different types of real estate fraud.
If you read my article Mortgage Fraud Can Have a Negative Ripple Effect I reported on trouble in the Temecula - Murrieta area. Recently, I have been contacted by several real estate investors who had been defrauded by this group of scam artists. This group represents over 1,000 families - some have lost everything they ever had. You can find out more about them at their website. This site really is a fascinating read because it calls names and business identities. If this interests you, please make sure you book-mark both their site as well as my blog, as I am in communication with several victims that I am interviewing for a series on how this fraud has effected them personally and how others may be able to avoid this type of problem in the future.
The second major contributing factor, in my opinion is the mortgage industry itself. They had ridiculous guidelines for home loans in the hundreds of thousands of dollars. It was a joke within the mortgage industry that if a home buyer could fog a mirror, they could qualify for a home loan. The guidelines were so lack and the offers so tempting that everyone should have bought a home. However, when the teaser rates escalated, homeowners across Hemet, San Jacinto and all of California and even America started to default on their loans - and this is why the mortgage lenders are taking heavy hits right now.
I guess it is no wonder that 6 of the nation's largest sub-prime lenders (those that specialized in bad credit loans) have filed for bankruptcy this year. My guess is there are more to follow.
"The principal source of the slowdown in economic growth that began last spring has been the substantial correction in the housing market," said Fed Chairman Ben Bernanke in a speech in late March. Bernanke has said the downturn in the housing market has shaved 1 percent off the nation's overall economic growth in the past year.
Don't think this is the worst of it yet, either
LOOK AT SOME OF THE NUMBERS
California has the third highest foreclosure rate in the country (36,659 filings), with 1 in every 308 households in foreclosure - which is about twice the national foreclosure average. In the golden State, our bank foreclosure rate increased 30% over April, 2007 and an astonishing 350% over the same period just a year earlier, according to RealtyTrac. California holds the record for the 5th consecutive month for the number of foreclosures filed at 36,659 for the month of May 2007.
I guess it should be no surprise that the three metropolitan areas with the highest home foreclosure rates are all in California and 3 others in the top 7. (Maybe next month we do a clean sweep and take all 10 spots - sorry)
- •Ø No. 1: Stockton, CA - 1 in 88 Households or 7.5 times the National Average
- •Ø No. 2: Merced, CA - 1 in 100 Households
- •Ø No. 3: Modesto, CA - 1 in 118 Households
- •Ø No. 5: Riverside-San Bernardino (This is where Hemet is)
- •Ø No. 6: Vallejo-Fairfield, CA
·Ø No. 7: Sacramento, CA
If you are a homeowner who is either already gotten into trouble with their bank mortgage or you just know that it is inevitable there are a number of alternatives that you might benefit from. I have just recently aligned myself with a national firm, Freedom Foreclosure Prevention Services (FFPS) as a Loss Mitigation Consultant in an effort to assist those in trouble and to offer additional services that may be able to help stop home foreclosure actions. If you want to find out more, please just follow this link.
Please make sure you come back and see what other good little tidbits I'll have for this very important topic.
SEE MY ARTICLES ON SHORT SALES
How do Short Sales Affect the Economy?
What Is A Short Sale?
Why would a Lender Consider a "Short Sale"?
What Should a Homeowner Do When They are Behind?
How Foreclosure are Effecting the Market
Mortgage Fraud Can Have a Negative Ripple Effect