June 24 average daily rates in Orange County for 30-year fixed loans with one-point fee: Conforming up to 6.078%, Jumbo up to 7.446% and Conforming-Jumbo up to 7.208% (Note: conforming-jumbo rates are for loans from $417,000 to $729,750, while conforming is up to $417,000 -- both types are sold to GSEs. Jumbos here are $730,000 or higher and not sold to GSEs.)
Source: Newspaper Chart Services 
O.C. one of riskiest places to make a home loan
May 13th, 2008, 12:01 am · 15 Comments · posted by Matt Padilla, Register Reporter and Blogger
First American CoreLogic’s nationwide ranking of riskiest places to make a home loan in the second quarter has Orange County in the Top 10 — probably not the kind of Top 10 the county wants to be a part of. O.C. rose nine slots to No. 8 out of 381 markets. In the first quarter, O.C. ranked No. 17.
A key cause: rapid fall in home prices. Other than that, the report didn’t say much about Orange County. Riverside-San Bernardino topped the list, again.
The Core Mortgage Risk Index forecasts delinquency risk and nationwide is 47 percent above the base period of the first quarter of 2002 and 16 percent higher than the same period a year ago. Driving the rise are foreclosures, falling home prices, and slower job growth, the report said. In the past, fraud has also been a big factor.
Related Links:
- Is your neighborhood in foreclosure danger?
- Are mortgage ‘cramdowns’ really so bad?
- Foreclosure rate in central O.C. 10 times that of coast
- Did the agencies rating mortgage bonds let greed trump common sense?
- O.C.’s coming wave of prime foreclosures?
- Are banks next?
- How credit unions are holding up amid housing slump
May 13th, 2008 at 7:27 am
This is typical of “old” news like that from Data-Slow, based on escrows that closed MONTHS ago.
Perhaps Steven Thomas should put them on his Market Report email mailing list so they can come up to speed a little more?
Read my lips, First American, Orange County is one of the most attractive areas in the world, to reside within - oh, wait! You already know that - YOU’RE headquartered here.
May 13th, 2008 at 8:08 am
Sighburrdood,
Just curious, did you live in Jonestown during the late 70s?
May 13th, 2008 at 8:25 am
I’m sure lenders are consulting with Sighburrdood on lending risk instead of FA.
“Sure, First American, you may have all this data and stuff, but you don’t seem to be aware that OC is a nice place to live. And that overrides everything.”
May 13th, 2008 at 9:28 am
It is a old news. These Reporters were mouthpiece for housing industgry in the past few years. For the record, I never impress with Mathieu Padilla with his reports.
More than 40 percent of OC houses were with jumbo loans or 2nd mortgage. Now the house values are going down, lenders refuse to drop rate, builders did not want to drop the price, banks were so greedy..Now they have no other choice. Orange County will hit very hard with high inventory and house for sales at a record with no place to go.
May 13th, 2008 at 9:51 am
carlos english please!!!
May 13th, 2008 at 10:07 am
Sighburrdood,
Their analysis of lending risk is an objective statement — they are not claiming that the OC is not a nice place to live, only that by the numbers, prices are dropping faster and harder here than in the other 370-so markets serviced by FA.
Apparently, being a nice place to live notwithstanding, people are not buying here fast enough or at high enough prices, and thus prices are coming down. As for using figures from escrows closed “months ago”, this may be a shock to you, but comparables, which are the figures commonly used to assess CURRENT VALUES, are all based on PAST SALES from escrows which have closed in past months. What does this mean? That the escrows which closed months ago will strongly dictate current prices, and dropping prices will beget more dropping prices.
Don’t take it personally, just sit tight and wait it out until the market returns to the old highs… After all, according to some people, that should only take a few more months, a year or two at the most right? What are you so mad about? You’re living in the best place in the world, so just enjoy it.
Before anyone jumps all over this — Disclosure: I am a homeowner and an RE investor with a vested interest in the health of the OC RE market, however a falling market is sometimes an OPPORTUNITY so I don’t begrudge some renters maybe finally getting a chance to become owners. Caveat Emptor.
May 13th, 2008 at 11:38 am
What good is living in “one of the most attractive areas in the world” when no bank will lend you money to buy a home there?
Most of Orange County is not “Beach City” nice like CDM, Newport, Laguna, HB, etc. where millionaires can throw money around without considering what the market value is. So how about above average Joe’s who’s household income is $100,000? These are the people supporting the O.C. economy, guess what kind of house they can afford on that income? A 1100 s.f. condo in Santa Ana. Oh sure, they can qualify for this $250,000 condo as long as they have $50,000 to put down right?
Don’t like that? Ok how about a 900 s.f. condo condo in Anaheim for $120,000? Seriously, as much as I love O.C., the reality is that buyers who WANT to buy a home can not because of 2 related reasons:
1. Buyers can not qualify based on “old school” banking guidelines now in place
2. Buyers “could” qualify if the prices of these houses were lower, but as long as the prices are high, buyers will not qualify.
Something to chew on: between 30%-50% of contracts that went into escrow did not get funding last month. This is anecdotal based on what my friends in the escrow business told me. The new condo development in downtown L.A. that was 80% sold just 3 months ago? It’s been converted to apartments because over 50% of the buyers did not get funding. There is no shortage of buyers - it’s a shortage of loans.
Somebody needs to ask Steve Thomas how many contracts his brokerage failed to get through closing due to bank refusals.
May 13th, 2008 at 12:07 pm
Ah, yes, the old refrain that this is “old news.” Only Steven Thomas has the “new news.” Everything else must be ignored. Good grief.
This is a report about risky lending in 2Q. We are in 2Q. And it is looking at how it expects loans being made in 2Q will perform in the future. Sorry, but I just don’t see how this is “old news.”
When the market turns (notice I did not say “if”), it will not turn quickly. RE markets just don’t move that quick. So, looking at stats, even if they are a couple of months old, will not hurt anyone who is looking for signs of the bottom in prices. We will bounce along the bottom for awhile. So, please, enough already with the whining and exhortations to ignore the “old news.”
May 13th, 2008 at 12:26 pm
‘Something to chew on: between 30%-50% of contracts that went into escrow did not get funding last month.”
This is very interesting - not surprising though. I would also assume there are problems with lenders either being slow or not agreeing to short sales, so many properties are stuck at some point in the sales process. I would think the amount of second loans around would also be adding to the complication.
May 13th, 2008 at 4:25 pm
CA dept of RE is no longer going to allow a house to go into escrow unless a short sale has already been approved by the holding lender. Its a joke to put these properties into escrow and sign a contract sales price on a short sale with out the lenders approval - it actually can get the seller into trouble. On top of that, why would a seller ever waste time doing a short sale?? it doesnt benefit the homeowner in anyway - there credit will read just like a foreclosure
May 13th, 2008 at 5:40 pm
You live in Yuppieville and now, since you can’t make the payments, you feel you have a gripe - tough! Who Cares? Any fool that didn’t read the fine print deserves what the get! This is also true for people who thing that long term savings and investments are too passe for them! The younger generation had mommy and daddy support them and put them through school but, now at 30, 40 and 50, they realize that the boat, the two new cars (one a gas hog and the other a sportster), the two story home in a (real nice neighbor) are being repo’s. We aren’t even considering the dozen or so maxed out credit cards! File bankrupcy chumps - start over - but this time THINK
May 13th, 2008 at 6:00 pm
“Something to chew on: between 30%-50% of contracts that went into escrow did not get funding last month. This is anecdotal based on what my friends in the escrow business told me.”
I doubt it.
May 14th, 2008 at 4:36 am
People, those 2000 sq ft houses in south OC are not worth$500k to $1 million - they just are not worth that much money. they are worth $300k, you dont think so? have all those people that live in those 2000 sq ft houses in south oc go apply for a new loan and see how much they can qualify for. That will give you the answer to the question as to how far this market will fall.
May 14th, 2008 at 9:39 pm
Here’s a recent article that shows how imprecisely, and inaccurately many NATIONAL BUBBLE “experts” skew figures in their irrelevant attempts to inform us, here in Orange County.
http://www.marketwatch.com/news/story/market-anomalies-skew-home-price-data/story.aspx?guid=%7BB242EC7A%2D7A08%2D49E4%2D8CB7%2DF0808F8EF52D%7D&dist=msr_2”
Hmm, pretty much what I’ve been stating for the past 4 months. There is only one source for accurate data about Orange County’s CURRENT housing market, and that is Steven Thomas - period!
June 4th, 2008 at 9:10 pm
Oh, poor Sigh …. burrr … DUDE!!! When will you get it? This market is toast. Another 25% in “in the bag” the question is will it go below construction cost, that is 100K for the typical piece o crap 60’s trash construction that is the OC market.
Like Nasdaq at 5000, so many said at 4000 “what a buy” it’s down 20%, but if you looked at fundamentals you knew there was a long way to go. Microsoft, Cisco, Dell, great companies, great names! Yes, but so overvalued.
The weather is great. I’ll give you 100K. Make it 150K.
What is the fundamental value of this garbage? Very, very little. Wake up and smell the coffee.