Wednesday, December 20, 2006

Central Valley leads nation in foreclosure risks

From the Central Valley Business Times:

Report: Central Valley leads nation in foreclosure risks
DURHAM, N.C. December 20, 2006 6:08am

• Merced ranked most risky
• Nationally, 2.2 Million borrowers face foreclosure on subprime loans

Holders of so-called “subprime” mortgages are in danger of losing their homes, especially in the Central Valley, according to a report from the Center for Responsible Lending.

As much as $164 billion in mortgages is at risk due to foreclosures in the subprime mortgage market, it says.

With 25 percent of the mortgages issued this year being subprime, Merced County ranks as the nation’s most risky area for foreclosures, according to the report.

Other Central Valley areas are not much better, it says.

Bakersfield ranks second in the nation; Fresno is fifth; Stockton is seventh and Visalia-Porterville is 13th.

“We project that one out of five (19 percent) subprime mortgages originated during the past two years will end in foreclosure. This rate is nearly double the projected rate of subprime loans made in 2002, and it exceeds the worst foreclosure experience in the modern mortgage market, which occurred during the ‘Oil Patch’ disaster of the 1980s,” the report says.

The organization says its study is the first comprehensive, nationwide review of millions of subprime mortgages originated from 1998 through the third quarter of 2006.

Factors driving subprime foreclosures include adjustable rate mortgages with steep built-in rate and payment increases; prepayment penalties; limited income documentation; and no escrow for taxes and insurance, the report says.

(Hat Tip to Modesto & Merced Bubble )


Anonymous said...

Foreclosures are hitting the fan now. Imagine that, you stick a bunch of highschool dropouts in a room with phones and a pot of money to loan out. Oh by the way if they do loan the money they get a commission. Well what do you think an idiot prior burger flippers going to do, do you think they have a clue about economics, and destruction they are causing to our economy. No, all they see is wow I gave somebody money, I got some money and its all good right. WRONG.

Housing Doom 2007

Perfect Storm

Bakersfield Bubble said...

The National Association of Realtors, which joined in releasing the report, expressed a level of discomfort with foreclosure rates.

The Realtors group fully shares "the concerns about increasing rates of default and foreclosures that are occurring in many areas around country," said President Pat Vredevoogd. "It appears to be especially bad in the cases of non-traditional and subprime mortgages."

Bakersfield Bubble said...

December 19 (EIRNS)--In a report that still understates the damage to be wrought by the popping of the Greenspan housing bubble, the Center for Responsible Lending (CRL) forecasts:

"As this year ends, 2.2 million households in the subprime market either have lost their homes to foreclosure, or hold subprime mortgages that will fail over the next several years." The study also shows that the worst failure rates (21-24%) will occur in the states which experienced the highest rates of apreciation, such as California, New York, Maryland, and Virginia.

A humanitarian disaster, "worse than Katrina" in the words of one speaker on a Wednesday telephone conference call about the new report, is about to hit.

Housing Wizard said...

You know Bakersfield Bubble ,the subprime loans going bust is a "humanitarian disaster"..

Sometimes I think that sub-prime lenders should work with these families and give them a free re-write loan at lower payments for 5 years until their income catches up with the real payments .

I know that these people were greedy or scared and bought more house than they could afford ,and they lost at the gamble ,but it was a mania .

Nobody told the public that the lending climate had changed and watch out because sub-prime lenders are willing to loan even when you don't qualify .Course these people lied on their loans in most cases per the instruction of the scum sub-prime loan agent .

I get really torn over what should be done about this problem .

Bakersfield Bubble said...


At one time i felt bad, not anymore. This will be a valubale lesson for many of these folks.

I hope the speculators and REIC members who drank the kool aid also take it pretty hard. Many of them kept this party going for far too long.

You know, if these would have continued they would all be bragging about how "hard" they worked to earn that equity. And that this boom was a new paradigm, blah blah. Its only those without chairs once the music stopped that are now singing the blues...

Bakersfield Bubble said...

I really need to edit my posts before I hit the publish button...

smoggiebakersfield said...

I can feel a little sorrow for the screwed homedebtors, very little.

On the other hand these irresponsible buyers played their role in causing the "bubble", by irresponsible actions.

I got over my head many years ago financially and took my lumps, I was the cause and had to deal with the effect, which meant Chapter 7. It was a real good lession learned!
Couldn't get a line of credit at Fingerhut for towels.

Anonymous said...

Source: MarketWatch

"But at midday, the Philadelphia Federal Reserve reported that manufacturing activity had weakened much worse than expected, putting more a negative spin on the economic picture."

"Stock investors have been walking a fine line in recent months amid hopes that the economy will have a soft landing in 2007, in spite of a fast-falling housing market."

Huh, looks like things aren't to rosey.

Anonymous said...

Per Don Cohen in today's paper - Our town is ok and the rest of the country is screwed. LOL. Asking a realtor for his analysis of this market - What a joke.

Bakersfield Bubble said...

I would welcome them asking my opinion. I have no financial stake in the outcome either way.