The California Foreclosure Prevention Act went into law on June 15, imposing a partial, temporary, 90-day moratorium on home foreclosures in California. The bill was passed in February, but just took effect this week. The law is intended to encourage lenders to provide mortgage workouts to financially distressed home owners, and was also intended to stem the tide of California home foreclosures. The law sounds good in name, but it is unlikely to have much impact. And in view of the current state of the market for San Diego homes, the timing of the effort is illogical and misguided.
This new foreclosure moratorium does not prevent foreclosures. At best, it will give some home owners up to 90 days to work out a loan modification with their mortgage lender. However, lenders are exempt from the temporary moratorium if they have a comprehensive loan modification program in place to help borrowers restructure their mortgage loans with more affordable monthly payments. This author has been unable to identify any lenders that have not already implemented a comprehensive loan modification program. So in reality, this foreclosure moratorium is foreclosure prevention in name only.
There have been nearly 400,000 home foreclosures in California since 2007. The hardest-hit areas have been counties in California’s inland empire. San Diego has had its share, particularly the lowest-priced neighborhoods that are dominated by entry-level homes and the lowest household income demographics. New home communities like Chula Vista/Eastlake and Rancho Bernardo/4-S Ranch have also been home to a large number of foreclosures. Wherever new homes were built from 2002 to 2006 in San Diego, nearly all of the residents turned upside down on their mortgages as a result of the recent price depreciation. These new home buyers, particularly those who financed their purchases with zero down payment, have been prone to walk away from their homes and their mortgages.
If there is a positive aspect of the new law, it is that lenders are now required to report to the state legislature regarding foreclosure reductions and loan modifications. Hopefully the increased reporting will give the legislators a better sense for the local California real estate markets. In San Diego, there is presently a genuine shortage of homes for sale. Buyers are now fiercely competing for a limited supply of San Diego homes. Overbidding has become the rule rather than the exception as it has turned into a seller’s market, with the banks and a limited number of bank REO listing agents holding the reins.
California legislators need to realize that real estate is an inherently local phenomenon. The state government could and probably should act to stem foreclosures in some California communities. However, a wise policy would be to effectively monitor sales activity, inventory levels, and market times at the local level to determine where to focus their efforts. A blanket approach to foreclosure policy on a statewide or nation-wide basis does not make sense. La Jolla homes and Del Mar homes have nothing in common with Bakersfield and Sacramento homes. It is also clear that the Orwellian approach of providing foreclosure assistance in name only is a waste of valuable state resources.
In San Diego the return to a “normal” and “healthy” real estate market now requires a greater number of San Diego CA homes for sale, not fewer. Median sales prices of homes in San Diego CA have risen for five months in a row. There are lines of prospective buyers at the door of every reasonably-priced house and condo that comes up for sale in San Diego County. Pass the word to your California representatives that they need to take a closer look at the San Diego real estate market and act accordingly.
I find it amazing that the San Diego market needs more rather than fewer homes for sale. It will be good to receive the reporting now required for foreclosures and loan modifications. But otherwise this Foreclosure Prevention Act seems a real waste of time and money.
Hopefull better reporting will lead to better legislative policy making. And although the Foreclosure Prevention Act seems pretty benign, there is a possiblity that it gave an incentive to some banks to implement loan modification programs earlier this year. The question is, did it really prevent any home foreclosures in California?
If the what you are saying isn’t total BS then then why is Southwest Riverside County so terrible? I guess this could be true because this area was built so much more heavily. If we get to a point that you can buy a home in Temecula for 1/5 of what you can in say Escondido is an extra 30 minute commute not worth it? Temecula is way nicer than Escondido in my opinion. I guess I don’t really expect that you are telling the truth given that you are a Realtor.
The areas having the most problems are those that experienced building booms in the 2000’s. As you guessed, that would include Southwest Riverside County. San Diego has fewer neighborhoods in that category, although Chula Vista / Eastlake and parts of Rancho Bernardo / 4S Ranch were hit pretty hard. Plus it is my understanding that prices in San Diego County dipped before Riverside and more quickly than Riverside. On the flipside, San Diego is expected to lead the recovery, and hopefully Riverside will be close behind. But San Diego also has advantages in terms of employment opportunities, better weather, and proximity to the coast.
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I wonder whether state governments are doing enough to protect their residents? Foreclosure Moratorium is necessary under such circumstances but I think you’re right, the timing wasn’t good because now house prices have started to go up and economy is getting better but it’s sad to see many people had to leave their houses for foreclosures. In Minnesota, the bill was heavily debated and it received very less backing from the government.
Buy a property at auction, which is the most common and traditional. First, check with the League title on the protocol, as the requirements of certified check, to offer and what the opening bids will be because if you plan to bid higher than the offer opening, examinations, provided that the maximum bids.
Nevertheless, this steps does not authorized inspection of the properties, needs cash up front for the purchase and the bid may become very high and may no longer become a right deal.
Great all-around summary.
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Thank you. I’m sure there are a lot of people facing foreclosures in San Diego who are also having problems with credit card debt. If you’d like to contribute information about how people can resolve credit issues with San Diego foreclosures, call me at the number on our website.