California is in the State of Foreclosure

By: Bob Smith

California foreclosure listings have skyrocketed. Data reported as of
March 2007 indicate that 1 out of 373 California households found itself in
one state or the other of the foreclosure process. Many of these same
households had obtained subprime or A-Alt loans to finance their
property.

The fact of the matter is, it its very expensive to purchase California real
estate. The higher the price, the more difficult it is to secure financing. In
recent years, many lenders have offered A-Alt or subprime loans to
people who would have otherwise not qualified to become a homeowner.

What is unfortunate is many recipients of this type of loan are defaulting.
The default rate is occurring at an alarming rate. The lenders now find
themselves on the receiving end and are getting these homes returned to
them, often in disarray. Lending organizations are being forced to create
completely new departments to handle the influx of paperwork and
properties in order to document and attempt to find a new homeowner for
the real estate.

Lenders do not want to be real estate agents. Simply, they do not want to
service, rehab or sell the properties. Lenders do not make money in
unoccupied homes with mortgage notes not being paid. To complicate
matters further, the former homeowner may have left the property needing
costly repairs. In order to attempt to resell the property, the lender now
has to become or hire a general contractor, cleaning service and realtor in
order to get the property prepared to a sellable condition.

If a particular area has many unoccupied homes, it tells any prospective
buyer that the area is troubled. Unoccupied properties also are an
invitation to squatters, loitering and looting. These unsavory practices
decrease the value of the property as well as surrounding properties,
making it difficult to not only sell, but to sell at a value close to the home's
suggested worth.

Fortunately, several companies have stepped in to assist a possible
refinancing with the troubled homeowner. Bank of America, Citibank and
Wells Fargo have developed programs enabling note holders of subprime
loans the opportunity to refinance the principal owed on the house to a
price that will meet their budget. The California economy needs California
foreclosure listings to decrease. Hopefully, real estate lending companies
are learning from its mistakes.

Foreclosures
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