Tuesday, May 29, 2007

CA Foreclosures.. Fact or Fiction?

For the last few months I've been posting my opinion that the Beach Cities is probably going to survive the current housing dilemma intact. Most residents in Manhattan Beach , Hermosa Beach, Redondo Beach and El Segundo are financially pretty savvy with good jobs. Needless to say not everyone has agreed with me.

Now there is no question that some parts of the state and the country are going to have a rough time of it as people who should never have purchased a house find themselves in real trouble with loans that will be adjusting. Yes that's right I noted that most of the people who will be in trouble should never have purchased a home.. and certainly not if they had to play lie, cheat and steal to do so.

Yesterday the LATimes had an article in the Business section..Getting a Fix on Foreclosure Data that looked over the major companies that are reporting on foreclosures in the state and nationwide. One of the major players in this market is ReatyTrac which claims to have the most comprehensive data available.. they seem to think that nearly everyone in CA is facing foreclosure..well 1 in 86 to be more precise.. or about 142,500 households... Data Quick says it's significantly less about 12,700 and Equifax is in the middle with a little over 56,700. Now I know you are wondering who and what to believe.. and I have no answer.. I know RealtyTrac is way too high, Equifax is also probably on the high side and Data Quick might be low if reports from the Inland Empire and Central Valley are correct.

So what does it mean for most of us.. well the chances of buying a home on The Strand for 50% of value at a foreclosure sale is probably still not a good bet. I know this just doesn't fit the scenario that most of the Bubble enthusiasts would like to see but I still think it is the most viable one.

If you track the NOD's ( notices of default) published in The DailyBreeze you will find that so far about 95% are in Torrance PO or the Harbor Gateway with a few scattered in Gardena. Two weeks ago I saw one in North Redondo but I don't know if it went to sale or if the seller made the late payments.

And that's most of the problem...depending on the lender, a NOD can be filled after your are 30 days late or 3 months. A NOD can be filled on each loan on a property so if there is a first and a second then two notices could be filled on the same property. Also a seller can bring the payments current and the NOD goes away which is what happens in most cases.

Only time will tell for sure but if the percentage of loans that are in trouble is 10-15% then that means that 90-85% are OK. This means problems but not a major crisis. If you are waiting for the big house across the street to be auctioned on the courthouse steps in Norwalk before buying.. you might be waiting for a long time..

No comments: