Foreclosure Crisis Will Worsen Before It Improves in San Diego

August 24th, 2008 | Tags: Foreclosure Crisis

All the data points to the fact that the foreclosure crisis will worsen before it improves. The North County real estate market has been flooded with foreclosed units and all the indications are that this tendency will continue through the current year, 2008.

In April the sales had picked up but this was offset by the rush of fresh foreclosed units. It seems that the housing recession in San Diego County will drag on for another two to three years. Over half the sub-prime mortgages are in foreclosure in this region according to Federal Reserve Bank, New York.

According to North County Times of all the bank repossession that have taken place within the last 120 days, 60% have not yet been put up on the market lists. About 1,800 houses have been finally foreclosed during the last four months. The default notices shot up to a peak of 1,100 in April according to ForeclosureRadar. The real estate agents are not agreeing with the analysis of gloom and opine that the picking up of sales is good news for the market.

The small time investors are the ones to be badly hit by the foreclosure crisis. With rates climbing higher in the sub-prime mortgage category the foreclosure problem will be exacerbated. Initially the rates were very low but ultimately this meant that with time the mortgage amount increases rather than going down. Borrowers cannot keep up and this leads to more foreclosures.

Foreclosure is not just about impersonal facts and figures but about individuals and their pain and suffering. Diane Goodwin is going to be forced to lose both the properties she had invested in. If the market does not pick up she will lose another three units including the one that is her home within one and a half years. All the five properties she now owns have negative authorization loans. She admits that the investment has been a big mistake. Obviously none could anticipate the foreclosure tornado that hit without a warning signal.

According to a Federal report there are 19,200 houses with Alt-A in San Diego County. These loans are a cut above the sub-prime but a rung below the prime loans. This new development in the foreclosure crisis is raising eyebrows. Many are beginning to fear that now it is going to be turn of the prime loan holders to fall into foreclosure.