Friday, January 26, 2007

'Wild Loans' Come Back to 'Haunt' Central Valley

From the Central Valley Business Times:

More than 1.2 million foreclosure filings were reported nationwide last year, up 42 percent from 2005, according to RealtyTrac, an Irvine-based online marketplace for foreclosure properties. It works out to one foreclosure filing for every 92 U.S. households.
Stockton in the Central Valley was ranked as the city having the nation’s 11th largest ratio of the number of foreclosures to total housing stock in 2006, according to Realty Trac. Its figures show there were 5,153 homes that went into the foreclosure process in Stockton last year. That works out to one for every 37 homes.

Other Central Valley cities tracked were Sacramento, ranked 32nd in the nation with 10,637 homes in foreclosure last year, or one for every 61 homes. Fresno ranked 39th in the nation with 3,673 homes in foreclosure or one for every 74 homes. Bakersfield was ranked 42nd. It saw 2,964 homes going into foreclosure in 2006, or one for every 78 homes.

"It's true that foreclosures could have a negative impact on the housing market if they continue to increase at this rate. And in some of the more problematic local markets they already may be contributing to slowing home price appreciation and a glut of homes for sale," says Mr. [James] Saccacio, [chief executive officer of RealtyTrac].
From the Stockton Record:
Mortgage default notices in San Joaquin County soared to a record high in the last three months of 2006, as statewide filings hit the highest level in eight years, a real estate information service reported.

Lenders notified 1,293 county homeowners they were in default in the fourth quarter, nearly three times the 464 filings seen in the same period of 2005, DataQuick Information Systems said. Statewide default notices rose nearly 21/2 times year-over-year to 37,273 from 27,218.

That was the largest number of default filings for San Joaquin County since DataQuick began tracking the data in 1992, said company analyst Andrew LePage. The previous high of 1,089 defaults was in the fourth quarter of 1997, followed by the first quarter of 1998 with 1,059 filings.
"There are always homeowners in financial distress ... even in a good economy, even in a good housing market," he said. "Now it manifests in default and, in some cases, actually in foreclosure, because without appreciation more of these people can't bail themselves out."
Aggressive financing schemes, with some lenders offering low initial start-up rates may also be at fault, said Art Godi, principal of Art Godi Realtors in Stockton and former president of the National Association of Realtors.

"We said at the time that some of those wild loans were going to come back and haunt somebody," Godi said Thursday. However, he added, "As long as (home prices are) going up 20 percent a year or whatever they were, that made up for a lot of the problems."

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