California Reels under Renewed Foreclosure Onslaught
Contrary to all hopes California is reeling under renewed foreclosure onslaught. During the second quarter of 2008 lenders launched foreclosure attacks on a record number of house owners in California. Simultaneously real estate markets have plunged to all time low levels.
There were 121,341 NOD’s or notices of default – the first step in the foreclosure process during the second quarter. It was an increase of 6.6% from the first quarter of this year and a jump of 124.9% from the second quarter of 2007 during which time there had been 53,943 foreclosure notices. DataQuick released the figures. The firm has been tracking foreclosures since 1992 and the numbers were the highest in the second quarter of this year – 2008, since then.
From the facts and figures it appears that the foreclosures are concentrated in some pockets and emanate from specific categories of mortgages. The areas are where there had been a building frenzy till the end of 2006. Prices had ballooned because of money flowing in from easy to get sub-prime loans. Many speculators had swooped in during this period of housing boom and zoom.
From the first to the second quarter there has been a modest increase in foreclosures. This makes many hopeful that foreclosures are now leveling off. Another explanation is that may be many lenders are opting more for workouts with the borrowers than pursuing the line of foreclosures. There is the third possibility that the lenders are so overcrowded and overwhelmed with defaulting borrowers that they do not have the infrastructure to pursue the foreclosure process.
Most of the loans threatened with foreclosure started during September 2005 and November 2006. The average age of the defaulting loans were 26 months as against 16 months noted a year earlier.
Foreclosures have not spared California prime mortgage holders. On an average count they are five months behind payment. On an average loan of $346,400, the borrowers owe $11,583. Borrowers are 8 months behind on equity loans and lines of credit.
In the second quarter 121,341 default notices were issued involving 118,020 houses because some of the borrowers were tripping on multiple loans like primary mortgage as well as line of equity. The default numbers were record breaking in nearly all the 58 counties of California. In Los Angeles County the residential defaults counted to 21,632 residential units. This broke the prior record of 21,444 of first quarter in 1996.
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