Current California foreclosure numbers have then-candidate Barack Obama's campaign promises of "hope" and "change" wearing thin for House Democrats. The San Francisco Chronicle highlights that Rep. Zoe Lofgren of San Jose is leading a Democratic mutiny, telling the Obama administration that "the president could pass all the jobs bills he wants but that won't fix the economy until the housing sector recovers."
How bad are California foreclosure statistics?
California Foreclosures Are Down by 17 Percent
DQ News reveals that California foreclosures "fell to a four-year low last quarter." The real estate news and custom data service attributes this move to changes made in the processes and procedures undertaken by the mortgage servicing industry. Between April and June, counties recorded 56,633 notices of default, which is a far cry from the 68,239 reported in the prior quarter. It is noteworthy that the record-high for foreclosures occurred in 2009's beginning quarter with 135,431 notices filed.
1 in 239 Mortgages Defaults
CNBC averaged July's foreclosure filings. Doing the math leads to the conclusion that one in every 239 households is currently defaulting on a mortgage loan -- using July figures only. In fact, when compared to June, July's foreclosures were up by 3.89 percent. (Compared to July 2010, the number is down by 16.02 percent.) Overall, California ranks second among the states with the highest foreclosure rates in the nation.
Cash Sales Skyrocket
The latest cash real estate transaction report from DQ News, dated February 28, highlights that "30.9 percent of all new and resale houses and condos sold were bought without a mortgage." This is a 23-year high for these types of transactions. Likely buyers are investors and private entities who are taking advantage of the lower California real estate prices. Attractive target properties are foreclosures and those homes that showed the largest drops in value. Considering that the median January 2011 cash purchase price for a California home was $160,000, the fact that this number is down from $175,000 in the preceding December is telling.
California Foreclosure Prevention Act Artificially Decreased Foreclosure Filings
The now-defunct temporary measure sought to add an additional 90 days to the three-month period between filing a default notice and then following up with a sale notice. The goal was to allot addition time for loan servicers to process home loan modification applications. Running from June 15, 2009 to January 1, 2011 -- with data being collected through September 30, 2010 -- approximately 171,000 home loan modifications were reported. Of these, an estimated 114,000 reflected lowered monthly mortgage payments. Nevertheless, the number of modifications declined in the five quarters of the California Foreclosure Prevention Act's duration is just as staggering; they are 31,515, 27,686, 42,977, 39,818 and 32,443 respectively.
Foreclosures affect California Spending
Sen. Barbara Boxer issued a foreclosure crisis report in 2008, which outlined that "residential investment and construction spending" are adversely affected by the California foreclosure crisis. In addition, government agencies note a fiscal shortfall because of lost tax income. The latter is aggravated by the drop in property values. Areas hardest hit by foreclosure-related financial problems are Stockton, Riverside, Oakland, Sacramento, Fresno, San Diego and Bakersfield.
Sylvia Cochran is a Los Angeles area resident with a firm finger on the pulse of California politics. Talk radio junkie, community volunteer and politically independent, she scrutinizes the good and the bad from both sides of the political aisle.
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