The Foreclosure Report

California Foreclosure Activity Up 104%

The LA Daily News has this from California. "Foreclosure activity in California soared an annual 104.4 percent in the second quarter as the housing market slump deepened. In the April through June period, 27,606 property owners entered some stage of the foreclosure process across the state, the second most in the nation, said RealtyTrac."

"A key factor to track now is the extent to which some of the higher-risk, adjustable-rate mortgages go into default, Realtytrac's Rick Sharga said. RealtyTrack estimates that hundreds of millions of dollars of these types of loans are due to re-set during the rest of this year and if they default at a higher rate than more traditional mortgage loans, it could significantly accelerate filings."

"'It's a worrisome trend,' said Jack Kyser, chief economist at the Los Angeles County Economic Development Corp. Not only are higher mortgage payments possible, many homeowners with adjustable rates are also facing higher gas and electricity costs, he said. 'There are some people who could fall off the edge. We've got to watch this trend very carefully.'"

The Daily Bulletin. "Sharga said the situation everyone in the industry is watching is the 'tidal wave' of 3/1 and 5/1 adjustable rate mortgages that will be coming due beginning in the second half of this year. 'I saw one report that said 44 percent of the mortgages in California the last few years have been ARMs,' he said. 'I believe the Mortgage Bankers Association had the national number at 36 percent.'"

"Regional economist John Husing said recently that he thought buyers who took the mortgages out in 2003 and 2004 would be fine. 'They'll have some equity in their homes,' he said. 'It's the ones who bought in 2005, since there hasn't been much appreciation since then, who could be in trouble.'"

posted by Ben Jones @ 12:51 PM