Can I have a minute... to recap 60 minutes from the Foreclosure Capital of America or Ground Zero - Stockton, CA.
Stockton is located 80 miles East of San Francisco and 80 miles North of San Jose. Stockton, CA has a population of over 290,000 people. A large amount of that population moved into Stockton starting back in with the real estate bubble in 2003, coming from the Bay Area and the Silicon Valley. The median house was sold at $230,000 (4 Bedroom single family home). By 2005, that same house had a value of $400,000. And now in 2008, same house is probably selling for 70% or less.
During the 2003 to 2005 yearsthe sub-prime loans really became the loans for those with low to mid credit scores, that were financially strapped and those that used the stated income to obtained loans. As a result of these sub-prime loans many are now facing adjustable increases that are leading to an out of control number of foreclosures in Stockton - and all over California. The heart of the problem of so many foreclosures is the sub-prime mortgage crisis. The worst part of the sub-prime issue began last summer and is still continue to reck the economy.
Couldn't anyone with a "big eye or big vision" seethat we were headed for foreclosure disaster? Where were the forecasters, the predictors, the "know it alls" BEFORE this got out of hand??? And where are they now? Remember back to 2004-2005 when... and I quote, "you had to apply NOT to get a loan". You could borrow more than what the home was valued at and most loans issued in Stockton, CA were sub-prime loans. They say people were putting money in their pockets at close of escrow. Now over ½ are in default or foreclosure. Never mind the people that have already lost their home.
During the last months (actually most of 2007), America has seen a decrease in the worth of investments, real estate decrease and our country getting closer and closer to a recession. Banks loaned money to hundred of billion of home-buyers that now can't pay them back! Interest rates on the sub-prime loans have jumped up 10-11% and people cannot afford that jump. The word "upside-down" has become a household word with homeowners, real estate agents, buyers, investors and others.
This started off being a ‘backyard" problem but it is not national news that it is affecting not only the homeowners but Wall Street - who took the risky debt and packaged it as a fancy securities and sold them around the world as safe investments. Right now no one is feeling these are safe.
Who got paid??? (Some)Borrowers, Brokers, Lenders, Wall Street, Giant Mortgage Companies, NY Investmen
t Houses, High Yield Mortgage Companies, Rating Agencies and fired CEOs (City Group - Charles Prince = $29 Million; Merrill Lynch - Stan O'Neal = $161 Million) - just to name a couple. Never mind the 120+ millions in write-off loss.
As of last week there were 4,200 homes in default or foreclosure in Stockton, CA. The report covered the subdivision of Weston Ranch in Stockton, CA. In this area, the FOR SALE signs are everywhere, every corner, and every block. 2 out of 3 For Sale sign is probably a foreclosure or distressed property. And some homeowners are doing nothing so there will be no sign in the yard, no agent and no attempt to hold on. There are properties that are under 70% cheaper priced than a few months ago.
According to the report: Things are getting worse, at least for a while. We're not even 40% of the way into this crisis situation. We have a long way to go... Home prices are going to go down even more. Right now Stockton's foreclosures are leading the way to recession.
 Terms to know
For more information on the foreclosure process, short sale process, short listings and definition of mortgage and real estate terms - Check out: Real Estate Terms/Definitions.. |
Forbearance | Where lenders will let borrowers cease payments due to a job loss or emergency and make up past payments at the end of the loan. Others will allow graduated payments, drop the interest rate, change the loan to an adjustable rate, from mortgage insurance payments. |
Foreclosure | The legal process by which an owner's right to a property is terminated, usually due to default. Your home is taken from you because of your default in making the payments. |
Lender workout | This is solely up to the lender and could be a plan that will help you keep your home - depending on the numbers. It is always worth it to give the lender a call and ask for owner assist programs that might help you in your situation. This should be done first before calling a real estate agent to sell your home. |
Notice of Default | A publicly recorded notice that a property owner has missed scheduled loan payments for a loan secured by a property. Some states require lenders to record a notice of default to begin the foreclosure process. |
Reinstate loan | The easiest way to cure a delinquency is to pay the lender everything that is owed. A lump sum that will bring payment and all lender charges current by a specific date, this includes missed payments, any late fees and any other fees, which the lender charges as a result of your delinquency. |
Short Sale | A term used to describe a real property sale where the total sales proceeds are less than the total balance due against the property, including the costs of sales. |
Sub-prime | When borrowers credit is less than prime qualify |
Click on these posts to find all the information you ever needed to know about the foreclosure process
Sad to say but the report was pretty close to reality here in Stockton, CA.
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Check out: Real Estate Terms/Definitions. And take a look at Mother and Daughter Blog and D'Adrea's Mother and Daughter Blog - for other tips for Sellers and Buyers. I work with my daughter as the Mother and Daughter Real Estate Team at Perfect Financial Solutions and we also focus in Short Sales and the Pre-Foreclosure process. Our consultations are free. Our aggressive marketing plan includes on-line listing advertising. If you are thinking of selling or buying a home in Northern California's Central Valley (San Joaquin County CA - includes Stockton, Manteca, Tracy, Lathrop) plus Stanislaus County CA - includes Modesto, Salida, Riverbank) & the East Bay (Alameda County CA - includes Hayward, Fremont, Newark, Union City & Oakland) and surrounding areas give us a call. If you would like a FREE Home Seller or Home Buyer Handbook, please call us at 866-750-8282 or email at US.
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The media did not exaggerate this horror story.
Your points pretty much say it all. This seems to have been the lending trend across the nation during that period of time.