Here in the great state of California-Foreclosures soar to state record

[AlCzervik]

Fed rate cut unlikely to have major impact

By Dale Kasler
Published 12:00 am PST Wednesday, January 23, 2008

A desperate slashing of interest rates may ease some of the nation's economic jitters but may not be enough to stave off recession. It also probably won't provide an immediate fix for a deepening foreclosure crisis that has moved into uncharted territory in California.

As the Federal Reserve announced a key interest-rate cut of three-quarters of a point Tuesday, new statistics showed that foreclosures and defaults during the fourth quarter of 2007 were the highest ever recorded in California. One analyst said it's likely that foreclosures will continue to climb.

DataQuick Information Systems Inc. said foreclosures in California jumped to 31,676 in the quarter, the most since DataQuick began tracking those numbers in 1988. For the whole year, foreclosures rose sevenfold, to a total of 84,375.

The increase was nearly as bad in the eight-county Sacramento region, where 10,049 homeowners lost their properties to lenders over the course of the year.

Perhaps more troubling was the continued rise in notices of default, issued by lenders after homeowners miss two or three mortgage payments. Defaults often lead to foreclosures.

Statewide defaults totaled 81,550 in the fourth quarter, the most since DataQuick began compiling those figures in 1992. Defaults more than doubled, to 254,824, for the entire year.

In Amador, El Dorado, Nevada, Placer, Sacramento, Sutter, Yolo and Yuba counties, defaults more than doubled to 24,787 for the year – a likely sign of more foreclosures to come.

"We're still climbing to a peak in foreclosure activity in California," said DataQuick analyst Andrew LePage. "We don't even have a sign of the peak."

The Fed's interest rate cut is likely to help somewhat. It will translate into lower rates on home equity lines of credit, spelling relief for many cash-strapped homeowners, said Fred Arnold, president-elect of the California Association of Mortgage Brokers.

The cut also may improve consumer confidence and bring some potential homebuyers "out of the woodwork," said Arnold, a broker in the Santa Clarita area.

But the move won't by itself revive California's dormant housing market. Arnold said it will do comparatively little for the thousands of subprime borrowers whose adjustable-rate loans are due to reset this year. The monthly payments for those borrowers will still shoot up significantly, he said.

Some may find relief in a plan announced by the White House last fall that calls for rates on adjustable-rate mortgages to be frozen for certain homeowners who are current on their payments.

For potential buyers, rates on 30-year fixed mortgages already have come down as the market anticipated some lowering by the Fed. But they likely won't go much lower, Arnold said.

Rates are averaging 5.42 percent, according to Bankrate.com. Rates on jumbo loans above $417,000, a threshold that covers much of the California market, are about a point higher.

However, Steve Galster, co-owner of Galster Group real estate in Fair Oaks, said he was told by a big lender that mortgage rates were declining Tuesday in response to the Fed's decision.

http://www.sacbee.com/103/v-print/story/654831.html

[livetohike]

1. It's going to be a bumpy ride for sure

We sold our house in Oceanside on Jan. 3, 2007 and moved back East to PA. Our house was on the market for 7 months. The folks who bought it had a rough time getting a mortgage - long story - but it turned out good for us. They still aren't foreclosed on, so I guess they are making it okay.

[AlCzervik]

2. it's a real mess in my city (elk grove) the foreclosure listings in my local, local paper

are now up to 8 pages. I generally read through them to look at the dates they closed and most of the loans were taken out in 2004 and 2005.

[livetohike]

3. Eight pages!! Wow

I wonder if those loans were re-fi's are just new loans.

The realtors that I know here in PA (two hours N. of Pgh) say they have never seen this many foreclosures here.

[N4457S]

6. I'm Half...

...Pennsylvanian, and I miss the people there. I also miss the attitude.

Ah, to return to the Land of People Who Talk Funny...

[livetohike]

8. Welcome to DU!

:hi:

I've lived in five other states (CA twice) and there is no place like home :-).

[N4457S]

10. But...

...where do a seasoned AIX administrator and Oracle DBA find work in NW Pennsylvania?

Answer? Nowhere, and we love what we do.

So I have to stay in California.

[livetohike]

11. We had similar problems trying to stay here

in 1978, 1983, and 2001. I sympathize with you. That's why we were in CA twice - for the jobs. Now we have retired early, thanks in part to making money on the CA real estate market.

[hunter]

15. In our paper they reduced the size of the type they use for these things.

It used to be just a few notices lost amidst the various other public notices, but now it is two entire pages of very dense type I can't read without my glasses.

[Supersedeas]

4. many many many states are setting records

[lovuian]

5. Until people have jobs and good wages nothing is going up

put all the credit you want out there this is what happens when people don't get good wages

[EFerrari]

7. Unemployment is rising here, too, except in the SF Bay area.

Our poor people. :(

[AlCzervik]

9. my city is having trouble because 3 homebuilders have left town leaving unfinished

neighborhoods so the workers they hired have lost their jobs as well, it is a might big cluster fuck up here.

[EFerrari]

12. That's awful. And this time of year is so hard for people, too.

I don't know why we're okay with jobs except that there is the Pacific Stock Exchange, defense contractors all over the place and some tech.

[AlCzervik]

13. we were thinking of moving a few years ago to the Cupertino area because thats where

my husbands job moved to but it was way to expensive, i notice that area hasn't come down much in price. Of course Google just moved in as well so i imagine they'll be a new influx of people buying and renting places.

[EFerrari]

14. That's where I grew up, on the Cupertino / Sunnyvale border.

Mom bought a house for about 20k and sold it in the 90s for 400k. It's insane.

If you go out to the east side of San Jose, you can get a much better deal and the neighborhood is much more of a neighborhood, too. You might have to deal occasionally with the dreaded Spanish language as well as some Vietnamese but it's much cooler than Cupertino and not a bad commute at all.