Foreclosure Floodgates Open in California - Post Moratorium
Click on image to enlarge. Chart from Calculated Risk and ForeclosureRadar.
This chart on California foreclosures for December should serve as a warning.
Foreclosure moratoriums, either by legislation or voluntary lender efforts, caused the December numbers for California to skyrocket as the floodgates re-opened after the temporary stop-gaps expired. As a result back-to-business as usual looks worse than it really is. Peter was robbed since September so Paul had to pay in December.
The drop in September and October was due to the CA law SB1137 enacted on September 5that essentially plugged the dike of foreclosures in California for 60-days.
There is another shoe to drop. Countrywide, Fannie Mae & Freddie Mac, as well as others have held off foreclosure notices creating a backlog of defaults that are barrelling down the highway, less whatever can be salvaged by loan modifications and refis. The foreclosure catch-up will probably show itself in the first two quarters of 2009 and artificially startle the sideliners in the housing market.
Perhaps the falling interest rates will help stop the bleeding. Perhaps loan modification efforts will gain more traction reducing foreclosures. Perhaps unemployment will improve.
While there is still substantial pain staring us in the face, if the next wave of defaults cleanses a substantial portion of bad debt, perhaps we can get on with stabilizing prices. RealtyTrac will be out later this week with the foreclosure numbers for the entire country and they should not be too harsh (except for CA) with the sizable private lender moratoriums.
I just don't believe that anything will be as damaging as the subprime tidal wave, no matter how dire the unemployment numbers. If this supposition is correct there is hope for 2009, especially with record low interest rates.
The following chart is from Mr. Mortgage Guide and is the same information as above but in a different format. Doesn't look any better does it?
Foreclosure moratoriums, either by legislation or voluntary lender efforts, caused the December numbers for California to skyrocket as the floodgates re-opened after the temporary stop-gaps expired. As a result back-to-business as usual looks worse than it really is. Peter was robbed since September so Paul had to pay in December.
The drop in September and October was due to the CA law SB1137 enacted on September 5that essentially plugged the dike of foreclosures in California for 60-days.
There is another shoe to drop. Countrywide, Fannie Mae & Freddie Mac, as well as others have held off foreclosure notices creating a backlog of defaults that are barrelling down the highway, less whatever can be salvaged by loan modifications and refis. The foreclosure catch-up will probably show itself in the first two quarters of 2009 and artificially startle the sideliners in the housing market.
Perhaps the falling interest rates will help stop the bleeding. Perhaps loan modification efforts will gain more traction reducing foreclosures. Perhaps unemployment will improve.
While there is still substantial pain staring us in the face, if the next wave of defaults cleanses a substantial portion of bad debt, perhaps we can get on with stabilizing prices. RealtyTrac will be out later this week with the foreclosure numbers for the entire country and they should not be too harsh (except for CA) with the sizable private lender moratoriums.
I just don't believe that anything will be as damaging as the subprime tidal wave, no matter how dire the unemployment numbers. If this supposition is correct there is hope for 2009, especially with record low interest rates.
The following chart is from Mr. Mortgage Guide and is the same information as above but in a different format. Doesn't look any better does it?
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