San Jose Business Journal: Foreclosure activity up 15% in California in fourth quarter

Foreclosure Activity Is Up

As adjustables start rising, homeowner's will start facing larger payments which will cause more opportunities for speculators.

This is a prime market for buying below market homes.
San Jose Business Journal ran this article recently:

Foreclosure activity up 15% in California in fourth quarter
Silicon Valley/San Jose Business Journal - February 10, 2006

Foreclosure activity in California was up 15.6 percent in the last three months of 2005, according to a report released Feb. 2.

Lending institutions sent 14,999 default notices to California homeowners during the October-to-December period, according to DataQuick Information Systems.

That was up 19 percent from the third quarter, and up 15.6 percent from 2004's fourth quarter.

All regions of the state saw an increase in foreclosure activity, ranging from 10.5 percent in the Bay Area to 19.6 percent in Southern California.

Santa Clara county saw a 5.6 percent increase, while Santa Cruz saw a 14.8 percent increase and Monterey went up 25.3 percent.

Dataquick said foreclosure activity hit a low during the third quarter of 2004 when 12,145 default notices were recorded. Defaults peaked in 1996's first quarter at 59,897.

"There's always going to be a certain amount of financial distress. People lose their jobs, have medical emergencies, get divorced, pass away or make bad money decisions at a certain rate. Because of the rise in home values, much of that financial distress has been covered by the increasing amount of equity that people have had in their homes. That equity is now being created at a slower pace, and default activity is inevitably on the rise," said Marshall Prentice, DataQuick president.

The annual home appreciation rate in the state hit 22.8 percent during the second quarter of 2004. Since then it has come down. In fourth quarter 2005 it was 14.5 percent. The appreciation rate is expected to fall below 10 percent sometime this summer.

The median amount owed when the default notice was recorded was $6,862 in fourth-quarter 2005, up from $6,130 for the same period a year ago.

Dataquick said that only about 5 percent of homeowners who find themselves in default actually lose their homes to foreclosure. Most are able to stop the foreclosure process by bringing their mortgage payments current, or by selling their home and paying the home loan off.

files under: Foreclosures Properties on the rise