Foreclosures are a growth industry in California. Statewide, repossessions increased 68 percent compared to the end of last year. The foreclosure rate is now twice as high as the same period last year. There is now one foreclosure filing for every 152 households. Nationwide, first-quarter foreclosure rates were up 35 percent compared to the same quarter last year.
It wasn't so long ago that the lack of foreclosures was a sign that the market was in fine shape. Only a year or so ago, foreclosure rates in the state were at all time lows. The logic was simple; if there are no foreclosures, then people could obviously afford their exotic interest-only mortgages. However, foreclosures will always be low when the market is rising. If a homeowner runs into any repayment trouble, he or she can sell the house at a profit and return to renting. With the sudden downturn, this goes into reverse. Foreclosure is the only way out of a toxic loan.
Only a year or so ago, interest only loans fired up the Californian property bubble. Now, those same loans have started to push up the foreclosure rate. There are a lot more mortgages in California that could go bad. Foreclosures are the future in California.
Appreciate this blogg post
ReplyDelete