California Loans News

The foreclosure crisis is being seen in different classes, due to the joblessness rates that are continuing to rise. According to Realy Trac, a foreclosure data researcher company, that there will be more or less than 3.4 million homes projected to enter foreclosure before the year ends. This is due to the unemployment streak of 6.5 months per person. Rick Sharga, the senior vice president of Realy Trac said that there is a new wave of foreclosure crisis to come because of these conditions.

Rick Sharga went on to explain, “The first wave of foreclosures was caused by bad loan products, while the second will be driven by unemployment. As of right now, we are at the beginning of wave two.  So virtually there will be no more foreclosures due to subprime lending. The demographics have changed and is now affecting people who are blue collar and entry to midlevel white collar. The foreclosure properties that we are now seeing are with higher loan values.”

He has further stated that perhaps the “best predictor” of locations to be hit hardest in the next wave would be those where unemployment rates are increasing. There will also be a third wave which would involve borrowers who had adjustable rate loans. These types of loans are going to default with “ridiculous rates.” The wave would be pursued by the middle of 2010 until 2011. Which means, that more middle-class people are expected to lose their residential properties.

He also stated that there has been a significant shift of the foreclosure crisis seen in other places besides California, Nevada, Florida and Arizona, which are the topmost locations in the foreclosure trend. What is happening now is that you are seeing places like Michigan and Ohio which were devastated by unemployment show an increase. These foreclosures will much harder to salvage because there is no income for these people.

Sharga also commented on the Obama administration’s move on assisting troubled homeowners via trial loan modification work. “Just by sheer volume alone, the Obama administration’s plan is really having a minimal effect. This loan modification program won’t have any success with the types of foreclosure you see now, because if you are unemployed, you don’t qualify for a loan modification.”

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