Year-end foreclosures in California signals impending doom

A report from the ForeclosureRadar, a Discovery Bay company, showed that about a quarter-million California houses faced foreclosure in 2008, which was even greater than the properties foreclosed in 2007.

The company further mentioned that December saw the issuance of a large number of default notices, replicating once again a situation during summer last year. This was a clear indicator of mounting foreclosures in the New Year.

A total of 249,940 properties were foreclosed last year, which was a marked increase of 158 percent from the the previous year, which saw just about 97,000 foreclosures. 2007 itself recorded an all time high of foreclosed properties, even surpassing the earlier record of the number of foreclosures that took place in the year 1996, when more than 58,000 homeowners faced foreclosures, as reported by the MDA DataQuick.

The number of foreclosures at the end of the year further complicates the issue. The situation which seemed in control for a period of three months took a rebound in December, when over 42,421 default notices were filed by the lending institutions across the states. Default notices sent to homeowners in California in December were almost double the number of notices sent in November.

The passing of a new state law in September had improved the situation, recording a lesser number of default notices during this time. Mortgage companies were urged by the new legislation to give the defaulters a prior notice before 30 days, before starting the proceedings of foreclosure.

But a replication of an unrelenting situation of Summer 2008 in December of the same year, indicated that even the new law SB 1137, had failed to bring down the number of foreclosed properties, as observed by Sean O’Toole, the founder of ForeclosureRadar.

He noted that the problem lies in the fact that, defaulted property owners, need to pay more on their houses than the valuation of the property. O’Toole remarked that “Lenders simply don’t have sufficient reserves to lower principal balances enough to help homeowners in foreclosure escape the prison of debt their home now represents.”

Santa Clara County recorded about 6,268 foreclosed properties last year, which was about 270 percent than in 2007. Speaking of such a colossal increase in Santa Clara County, he pointed out that “there was very little foreclosure activity in Santa Clara in 2007 compared to other places that got an earlier start.”

This was reckoned to be the highest percentage increase in any big county within the state. Monterey County echoed a similar condition, with foreclosed properties increasing by 262 percent. The counties of Southern California were the worst affected last year.

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