Foreclosure rate

California foreclosures soared to their highest level in more than a decade during the last quarter according to a recent report by DataQuick Information Systems.Lenders submitted 53,943 Notices of Default (NoDs) during the period from April to June, according to DataQuick, up 15.4 percent from 46,760 from the previous quarter, marking the highest level recorded since the fourth quarter of 1996 at 54,045 NoDs. Foreclosure notices topped out at 61,541 during the first quarter of 1996, but fell to 12,417 by the third quarter.

Banks foreclosed on 2,251 homes during April, May and June in the capital region. Most of the problem is in Sacramento where 1,662 owners lost their homes. Placer County recorded 220 foreclosures for the 3-month period and El Dorado County had the fewest with 89 for the quarter. I have seen it worse. During the first quarter of 1997 2,441 homes were foreclosed upon in Sacramento County. The worst quarter for El Dorado County was the second quarter of 1992 with 167 foreclosures and Placer County had 322 foreclosures during the first quarter of 1996.

While the number of foreclosures are significant and could get worst this market correction isn’t near as bad as the one we had in the 1990s. Considering the number of people and houses we had in our region between 1992 and 1996 and the increased population and number of homes we have today 15 years later. A better comparison would be the total number of foreclosures per number of homes or total number of defaults compared to the total number of loans.

How about a 2 percent loan?

How about a loan with a 2 percent interest rate? Poor credit? No credit? No problem! Heard and seen it all before from Internet Lenders and don’t believe it? Well you’re not alone. Two out of three adults believe mortgage pitches are either only slightly credible or not credible at all.
More than one in five adults, 22 percent, are convinced mortgage advertising and marketing is not credible at all and that could be putting the industry's reputation at stake, according to a recent poll. Calling the results "no surprise" Harris Interactive conducted a poll that found many consumers have lost faith in the financing they need to purchase what's often the most expensive purchase they'll ever complete.

When the Harris Poll of 2,383 adults was conducted online between May 8 and 14, only about one in four had favorable perceptions about mortgage ads, with only 3 percent saying they had very favorable perceptions.

During the last housing boom, the mortgage industry experienced growing levels of predatory lending, fraud and financial crimes that spawned a swarm of complaints from civil and class action lawsuits to federal investigations of organized crime. Collusion, conspiracy and insider aiding and abetting among other sectors of the real estate industry share the blame for consumers who believe mortgage ads are empty lures.

Today's growing number of foreclosures is largely attributed to mishandled underwriting for subprime, nontraditional and other risky mortgages. Until recently, and for several years, millions of loans were approved, based not on a long-term ability to repay, but based on the ability to repay the loan at the starter or teaser mortgage interest rates. The ability to repay was also often misstated, not corroborated, ignored or otherwise simply not factored into the underwriting.

Since the boom waned, interest rates on many loans have risen, pushing monthly mortgage payments out of reach and more homes into foreclosure. The mortgage market morass is expected to cost 2 million people their homes before the market bottoms out. Worsening matters, the mortgage industry has since pulled to rug out from under hard-luck easy-money borrowers by making those same loans nearly impossible to obtain now. The move was certainly necessary to stop the bleeding, but it leaves homeowners at the mercy of a lender's workout, and the housing market swollen with inventory and falling prices.