California Loans News

The foreclosure crisis is seen to be spreading into different classes. This is due to the joblessness rates continuing to rise. According to foreclosure data researcher company Realty Trac, there have been more or less 3.4 million homes projected to enter foreclosure before this year ends. And this event occurred due to the unemployment streak of 6.5 months per person. Realty Trac senior vice president Rick Sharga said that there is a new wave of foreclosure crisis because of the said conditions.

Sharga explained, “The first wave was caused by bad loan products, while the second will be driven by unemployment. Right now, we’re at the beginning of wave two. There are virtually no more foreclosures that are the result of subprime lending. The demographics of the foreclosure crisis are changing and affecting people who were blue collar and entry to midlevel white collar. We’re now seeing foreclosures on properties with higher loan values.”

He further said that perhaps the “best predictor” of locations to be hit hardest in the next wave would be those where unemployment rates are increasing. The third wave would also involve borrowers who had adjustable rate loans. The loans of this kind are going to default with “ridiculous rates.” The wave would be pursued by the middle of 2010 until 2011. All these then reflect that more middle-class people are expected to lose their residential properties.

Sharga also said that there is a significant shift of the foreclosure crisis seen in locations other than California, Nevada, Florida and Arizona – the topmost locations in the foreclosure trends. “What’s happening now is that you’re seeing places like Michigan and Ohio that were devastated by unemployment have an increase. Those foreclosures are much harder to salvage because those people have no income.”

He also commented on the Obama administration’s move on assisting troubled homeowners via trial loan modification work. “By sheer volume, the Obama administration’s plan is really having a minimal effect. The administration’s loan modification program won’t have any success with the types of foreclosure you see now. If you’re unemployed, you don’t qualify for a loan modifcation.”

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