I was reading another thread Here, and am amazed at how uninformed some people are...

I decided to do a little more research into the California and National foreclosure markets...

On Sept, 4th the National Mortgage Bankers Association printed this report:
http://www.mortgagebankers.org/Newsa...nter/56555.htm.
This is interesting reading. In the above report you will read that in 34 states the actual foreclosure rates DROPPED.

Basically there are four states where the majority of the foreclosures are coming from:
What's really happening... First off, mortgage delinquency problems can only affect people with outstanding loans. Nationally, 34% of homeowners own their home outright (No Mortgage debt!) http://www.mortgagebankers.org/files...ebtfor2006.pdf

Next, of the 66% of homeowners with mortgages, the delinquency rates are currently at 5.12% nationally. And Nationally, the percentage of loans in the foreclosure process is only 1.4%, yet California and the other four states which are driving the increase in Foreclosures have a much higher number of both NoD's and Foreclosures.

Last quarter's default level in CA was the highest since 54,045 NoDs were recorded statewide in fourth-quarter 1996, we had 53,943 NoD's. Defaults peaked in first-quarter 1996 at 61,541. A low of 12,417 was reached in third-quarter 2004, and here in CA (where we have a population of 36,000,000 and a 2005 estimate of 7,390,885 Owner Occupied housing units!) we have had an average of 34,172 NoDs filed quarterly since 1992, when DataQuick's NoD statistics begin.

So, what's happening here in CA?

The vast majority of the NoD's are coming from mortgages that were made either to subprime borrowers or non owner occupied homes (or both) which were originated over the last 18 months. Nationwide 14.5% of the subprime borrowers are in default, yet here in CA that number is only 12.6%. Although...

http://www.dqnews.com/RRFor0707.shtm

All of the areas with above average default numbers have a large number of commuters, and had a large number of non-owner occupied transactions over the last 18 months. Keep in mind that gas costs have increased substantially over the last two years.


The meltdown in the Subprime Lending market has also led to many of the Subprime loan originators having to take back loans. This has dried up their capital to originate new loans and has resulted in a number of these companies going out of business. (Dozens of Large lenders are no longer in business)

The lack of funding options available, in particular Stated 100% interest only loans (which were very popular from 2002 to the middle of 2006), has resulted in less buyers able to purchase homes and therefore we are seeing longer market times for homes and an increase in inventory.

Unfortunately, with longer market times those people who can't or choose to not make any additional mortgage payments are having their homes go into foreclosure.

An interesting side note is that while we are seeing an increase in NoD's here in California home Prices are not decreasing that much...

http://www.dqnews.com/ZIPCAR.shtm as you can see here the prices of homes in the Central Valley have fallen but several counties have nice price increases (Los Angeles County is up 4.96% and Santa Barbara County is up 20%).

Remember, 34% of homeowners don't have a mortgage at all... Only 5.12% of those who do have a loan are delinquent, and while the Total number of home Sales are down, prices are not down much.

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