Foreclosures And Pre-Foreclosures Spell Trouble Ahead

DataQuick information shows that foreclosures and pre-foreclosures in the Coastside region spell trouble ahead. In Half Moon Bay four foreclosures were noted during the second quarter of this year. Previously in 2007 there was only one foreclosure during the same period.

RealtyTrac collects information of foreclosures daily. According to it there were 29 pre-foreclosures in Half Moon Bay this year. In the second quarter there were 24 pre-foreclosures. During the second quarter of the previous year of 2007 there had been only six pre-foreclosures in this region. The mortgaged property enters the pre-foreclosure stage upon receiving a Notice of Default from the bank.

In Moss Beach there have been three pre-foreclosures and three foreclosures. Montana does not record any foreclosures but there have been 8 pre-foreclosure notices. In La Honda there have been five and two pre-foreclosures and foreclosures respectively. In Pescadero there is one pre-foreclosed house but zero foreclosed ones in El Granada, Princeton and Miramar. In East Bay the situation is worse. But on the coast although the numbers are comparatively low it shows a sizeable increase from the previous year. Most of the foreclosed properties are single-family houses with price ranging from $500,000 to $800,000.In the second quarter of 2007 there were four foreclosures in Half Moon Bay according to DataQuick. This shows 100% increase in this year. What is more worrying is that in pre-foreclosures the increase is 500%. Montara and Moss Beach are also experiencing greater proportionate increases.

The foreclosures largely come from the sub-prime category of mortgages with teaser interest rates. For about a year 1.5% to 2% only is charged. But after the honeymoon period is over the interest jumps to 9% or even 10%. The equity on the houses has vanished. This causes the value of the house to be worth less than the loan amount. As a result many people just walk away.

High number of foreclosures means danger not only to the borrower but also to the lender, the government at all levels and the locality. It means the lender has too many houses on the list and this weakens the real estate market. A slow real estate market means less collection of taxes. Empty houses attract crime and disease, which a government finds difficult to contain with depleted funds. Meanwhile government contributions to public utility services suffer at a time when these are most needed while humans and animals have nothing but the sky to cover them.