Foreclosures On A Rampaging Spree In California

April 25th, 2008 | Tags: Foreclosures

The first quarter of this year saw foreclosures on a rampaging and stampeding spree in California. The dubious mortgages collapsed as the number of houses going into foreclosures set a record, according to information released by DataQuick Information Systems.

Approximately 1% of all the houses in the state numbering 110,000 were served default notices. This is the first stage of the foreclosure judicial process. The default notices had increased by 143% from the first quarter of 2007. Most of those with default warnings never manage to salvage their properties but surrender it to the lenders. Only 32% of the recipients of such notices manage to come out by either refinancing or selling the property to clear the mortgage dues.

The rising rate of defaults ending up in foreclosure auctions highlights the slump in the real estate market. It also points to the huge number of houses that had been bought during the ballooning of the property market with multiple housing loans. This makes it all the more difficult to work out an amicable mutually beneficial settlement with the lenders.

During the first quarter the increase in foreclosure jumped to 327% in California from what it was a year ago. This calculates to about 500 foreclosures each day! The danger is that at this rate the foreclosure virus may spread beyond the questionable mortgages to the more staid conventional prime mortgages. During the first three month of the current year trustee deeds actually recorded numbered 47,171. It was a 48.9% high over the previous quarter’s number of 31,676. Last year the first quarter numbers were 11,032 showing a jump of 327% this year. This translates to 517 foreclosures per day during the first three months of 2008.

Marshall Prentice of DataQuick opines that the main reason for this debacle in foreclosure number is the fall in house values. Loans that had ‘gone wild’ during 2005 and 2006 are now gnawing into the entrails of the system. The biggest question looming large before all is whether the nation is or is not in recession. If it is the foreclosures are going to make more inroads into the mortgage field.

Statistics shows that the foreclosure jump during the first quarter of the current year tantamounts to the highest since the last 16 years. Most of the loans were made from August 2005 to October 2006. The loans, on an average, lasted 23 months. House owners in California are on an average five months behind schedule owing $11,474 on $346,750 mortgage.