Banks foreclosed on 24,209 houses and condos in California in the third quarter, up 38.7 percent from the second quarter and a 604.8 percent increase from a year ago, reports DataQuick. It’s the the highest total in the company’s database, which goes back to 1988.
The second quarter total of 17,458 foreclosures was also a record, surpassing for the first time the previous peak of 15,418 in the third quarter of 1996.
During the same period, banks filed 72,571 notices of default, surpassing for the first time the 1996 first-quarter peak of 61,541. Banks typically file a NOD after a borrower misses three or more monthly payments.
“We know now, in emerging detail, that a lot of these loans shouldn’t have been made,” said Marshall Prentice, DataQuick’s president, in a statement. “The issue is whether the real estate market and the economy will digest these over the next year or two, or if housing market distress will bring the economy to its knees. Right now, most California neighborhoods do not have much of a foreclosure problem. But where there is a problem, it’s getting nasty.”
DataQuick estimates that 54.1 percent of defaulted loans statewide are ending in foreclosure, up from 19.1 percent a year ago.
In Orange County, banks filed 3,882 notices of default in the three months ended Sept. 30, up 158.8 percent from a year ago.
That tops a…
- 144.1 percent increase in LA to 13,583 NODs
- 140.9 percent increase in San Diego to 5,673 NODs
- 138.2 percent increase in Ventura to 1,377 NODs
However, the increase was higherin …
- Riverside, with a 204.3% increase to 9,250 NODs
- San Bernardino, had a 176.2 percent increase to 7,038 NODs
Here’s more from DataQuick:
“Most of the loans that went into default last quarter were originated between July 2005 and September 2006. The median age was 18 months. Loan originations peaked in August 2005. The use of adjustable-rate mortgages for primary purchase home loans peaked at 77.8% in May 2005 and has since fallen.
“Because a residence may be financed with multiple loans, last quarter’s 72,751 default notices were recorded on 68,746 different residences.
“On primary mortgages statewide, homeowners were a median five months behind on their payments when the lender started the default process. The borrowers owed a median $10,914 on a median $344,000 mortgage.”
Big numbers. So when do REO’s and short sales begin to impact fair market value? In my opinion, its when the number of active listings in any given area support the recent bank REO sales and short sale actives. In other words: Currently “arms-length” sellers in the markets I currently appraise (Long Beach / South Central LA) are listing their homes at equal or lower than REO sales and “short” listings. This is the demand / supply side of economics that emerges during periods of market distress. Seller have capitulated and understand now, that their price, while not a distress sale, should still reflect current inventory. I see this now in LA County, and also in the mid-section of OC, as reported in the local media. Mission Viejo, Ladera, all of Trabuco / RSM, Costa Mesa, and HB, are all beginning to experience this phenom. Things get MUCH worse before they get better. But the good news is that slowly we are seeing the buying and selling mentality rely more on fundamentals. This is healthy for the market and painful for speculators or niave recent buyers with less than 5% down. Life is not without risk. But you must also use common sense. When someone tells you buy now or forever miss your chance. Take a step back and realize how rediculous that statement really is. It might mean the difference between poverty and / or a omfortable retirement. Just how did all these people think they were going to eventually pay off that 600k house? And when?
thank god countrywide is “re-writing” all those sub prime loans that will certainly solve that “little” sub-prime
problem lloolll
We better brace ourselves…it’s going to be a bumpy ride!
O C appraiser,
Thanks for the inside look…………….do you see deals fall through because an appraisal won’t justify the amount of a loan?
I work for a portfolio lender. I dont see what happens after I submit my appraisal. The department gets their share of “appeals”, but at that point it becomes an underwriting and management decision, whether or not to fund the loan. We dont do 100% financing. So there is always a buffer. Couple that with a strong appraisal department, and you get better performance than all your peers. Not selling my company or anything, but its great knowing I CAN make a good living as an honest, ethical, very competent appraiser.
Answer to you question: Deals fall through all the time. Right now they are falling through just about everywhere, at least if they can get the phone to ring. Lenders of last resort in the Jumbo market are large banks right now. Nobody else wants to touch the paper. These big banks know they can still make money at this, they just need strong underwriting/appraisal departments, and have to keep the loans in house. Probably one of the reasons I,m real busy. There just arent that many banks who can and will loan out past the 417K FNMA limit. What does that get you in OC? Big correction coming. Stay tuned.
Housing in Orange County and California has hundred of Entrances but very few Exits.
Foreclosure is the only best option. Housing is not a buble until it busts.
No Money. No Credits. No Job. No Down Payment. No Document. No Closing Costs. No Fee. 600,000 dollars stucco box. NO PROBLEM.
NO BAIL OUT FOR FAT CAT BANKS, IRRESPONSIBLE LENDERS, AND GREEDY INVESTORS.
Impeach republicans,
NO BAILOUT!
Carlos is wasnt just the mort bank that are to blame it is also the greedy borrowers that refied to take out all that equity, the ones that didnt read the docs and just signed for the house but failed to plan out the future.
its a two way street, No bail out for the people that didnt make the right financial decision regarding their lives instead they depended on someone else. Since when is it the banks job to do that?
It was a burger king market, borrowers wanted it now with no money down and they didnt want to hear no.
Now that they are in trouble and in default they turn and blame the banks,
The fact that the banks provided stupid loans based on undocumented income of 100k for walking dogs isnt the reason the borowers got themselves into trouble, its a cause but the main reason is because the borrowers didnt do their homework and plann out their budget when the loan reset.
They didnt want to do it the right way. In the end it doenst matter if the broker pressured with his honey tongue how great a home it was. The borrowers should have taken the time to look at the loan from all angles.
Its a house for Christ sake but people treat it like they are getting a burger from the value meal at McDonalds.
Lets just hope Bush doesnt put us in a war With Iran before his term is up. That would be just like him to top the cake with a nice cherry bomb.before he leaves……a govt bail out will be the least of our problems at that point.