Wednesday, May 03, 2006

Sacramento Foreclosure Activity Up 49%; Ameriquest Closes Local Branches

The Saramento Bee reports on rising foreclosure activity in the Sacramento housing market.

In a fresh indicator of troubles for overstretched homeowners, an increasing number of Sacramento-area residents are behind in their mortgage payments, putting them on a track to foreclosure. Sacramento, Placer and Yuba counties all reported sizable increases in default notices in the first quarter of 2006 compared with the same time last year, the research firm DataQuick Information Systems said Tuesday. The notices are issued by financial institutions when mortgage holders miss at least two consecutive house payments.

The statistics pose a sobering counterpoint to a flurry of upbeat pronouncements about job growth and the state and national economy, showing that many who entered a rising home market with adjustable rate loans are beginning to struggle under the weight of rising interest rates and higher monthly mortgage payments. DataQuick said year-over-year default notices jumped 49 percent in Sacramento County to 1,136; 90 percent in Placer to 239; and 109 percent in Yuba to 48...

DataQuick analyst John Karevoll said increases on the scale of those in metropolitan Sacramento, and also in San Diego, Napa, Riverside and Ventura counties, indicate markets where home values are not appreciating fast enough to provide escape options like refinancing or selling the house to pay off loan balances. Home values in the area remain below their 2005 peaks, according to several real estate reports...

[W]orries appear to be mounting in Sacramento with continued interest rate hikes. Many believe default notices are headed up for the year ahead. "We're definitely seeing the number of calls increase related to foreclosure," said Jennifer Harris, executive director of Sacramento's Home Loan Counseling Center. She said people who stretched themselves too far to buy a house are seeing payments rise $150 to $200 a month and asking, "What am I going to do?"

Many lack easy options to get themselves out of trouble, said Vicky Henderson, loan consultant at Vitek Mortgage in Sacramento. "I can't tell you the number of people who call who want to finance into a fixed-rate loan, and I can't. They don't have the value," she said.
And the Stockton Record has this story:
First-quarter foreclosure activity in San Joaquin County hit the highest level in two years as the slow housing market made it tougher for owners to sell homes to pay off their mortgages...

A crunch over mortgage defaults hasn't shown up yet, although mortgage-related credit counseling inquiries have been increasing, said Richard Pittman, housing services coordinator for By Design Financial Solutions, a nonprofit doing business in San Joaquin County as Consumer Credit Counseling Service of Mid-Counties.

Because of rising home prices, many buyers relied on adjustable rate mortgages to get into their homes, he said. So with rising interest rates, some ARM payments, for example, could jump by 30 percent to 40 percent if due to move to full market interest rates. Anyone who has been in a home at least a couple of years likely still would be able to sell, just not as quickly as when the California housing market was hot, he said.

Also, refinance activity has dropped off because home equity is not quickly growing in most California homes as it had been in recent years, he said. Many homeowners refinanced four, five or six times, using the fast-growing equity as sort of a piggy bank from which to pull cash, Pittman said. "So from that standpoint, the good days may be over."
Meanwhile, Ameriquest is closing local retail branches.
ACC Capital Holdings, the parent company of Ameriquest Mortgage Co. and Town and Country Credit, said Tuesday it is closing all of its 229 retail mortgage branches and cutting 3,800 jobs across the country to cut costs. The closures include a handful of Ameriquest and Town and Country retail branches in Sacramento, Rancho Cordova and Stockton, possibly affecting dozens of employees in the region.

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