The Bay Area in California, has become one of the worst victims of the foreclosure crisis

The Bay Area in California,  has become one of the worst victims of the foreclosure crisis. Ironically it is its very prosperity that has brought about its relative fall. The thriving economy attracted business and people who needed houses to stay in. Thus the demand for housing shot up at a time when money was pouring into the mortgage industry. It was easy to get a sub-prime or other exotic loans without too many questions being asked or much down payment being made.

People wanted to stay within commuting distance of the big cities and it was in these suburbs and neo-suburbs that the housing boom started. But when the crash came these areas were worst hit. Without jobs there cannot be people and foreclosures have left behind a trail of blight in the Bay Area.

The region has been divided into 9 counties – it being the birthplace of most of the innovations and cradle of diversity in USA. This mood has allowed for the growth of healthy competition. The nine counties are San Francisco, Marin, Napa, Sonoma, Solano, Contra Costa, Alameda, Santa Clara and San Mateo. The Bay Area also boasts three large cities of San Francisco, Oakland and San Jose. The Silicon Valley is not unknown to anyone.

Last October the foreclosure listing numbers in the San Francisco Bay Area lessened but defaults were on the march. In this month over 5,600 homes in the area were either defaulting or in foreclosure. It was decent decrease by 34% from the September number but more than 17% higher than the figures of October 2008.

From these 5,600, the number of houses repossessed by the lenders decreased to a great extent but the default figures increased. Pundits opine that the number of REO’s declined because of the increased efforts put in by the Home Affordable Modification Program otherwise known as HAMP. By it mortgages are being modified so as to stop then from slipping into foreclosure.

But Mark Hanson of Field Check Group that conducts research in real estate, many of those who had their loans modified are again defaulting. Their numbers are increasing in the Bay Area and will continue to do so in the forthcoming months.  Hanson argued that the modifications are creating a huge back pile of foreclosures and only just warding off foreclosures for the time being. As such it is doing more harm than good. These houses are not entering the foreclosure listings. Hanson has noted that 50% to 70% of those who have had their loans modified are re-defaulting.

Last October more than 2,400 home owners in the Bay Area were served default notices – it being a staggering 72% increase over the figures of October 2008. Another lot of 2,234 homes have entered the next stage of foreclosure – poised for trustee sale. Here the increase is by 37% compared to the previous year. 947 more residential houses were taken over possessed again by the banks showing a spike of 46% from October 2008.

Recently because of the modification program the numbers of REOs have been dropping but experts say that this is only temporary and Bay Area should be prepared for a flood in the forthcoming year.

Experts are putting the blame on unemployment and the resetting of interest rates of ARM loans for the spike in October. Those who took these latter loans had higher credit scores at the time of inking the contract. They were better off than the sub-prime borrowers. But with the economic climate having changed so too have their fortunes and they are now defaulting with little chance of selling or refinancing their properties.

Posted by Eureka Expert on Jan 22 2010. Filed under Foreclosures, Housing, Short Sales. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry