Foreclosure Activity Up 33% In CaliforniaA report on defaults in the west. "Foreclosure activity in California and other Western housing markets is on the increase in part because high-risk adjustable-rate loans are beginning to reset to fully amortized payment schedules, a property tracker said Monday. During the year's first three months, all types of foreclosure activity in California jumped an annual 33.6 percent, to 28,550 incidents."
"Notices of defaults, one of three indicators tracked and the first step in the foreclosure process, increased 36.5 percent, to 20,515 incidents. And the number of real estate-owned properties, the final step in the process and notification that there is a new owner, increased 27 percent, to 1,41l."
"Now home sales are softening, appreciation is not as robust as a year ago, interest rates are rising and inventory is building. Alexis McGee also said the creative adjustable loans that helped buyers jump into high-priced markets such as Southern California will continue to impact foreclosure activity as the market continues its shake-out."
"Analysts have noted that of the six Southern California counties, San Diego is the furthest along in the cycle. McGee said that in recent years more than half of home purchases were financed with interest-only adjustable loans or option adjustables with very low teaser rates."
"Someone who paid about $500,000 for a home in the San Fernando Valley last year and got a teaser rate of 1 percent would have initially paid $1,608 a month. If that loan resets next year at 6.5 percent, the payment soars 96.5 percent, to $3,160."
"Nevada foreclosure activity has more than doubled this year to 4,544 incidents versus the 2005 final quarter. The problem there is speculation, with 25 percent of new home sales going to out-of-state investors."
"Colorado has a 50 percent increase in new foreclosures in this year's first three months compared with the final three months of last year. And they are up an annual 96 percent."