February 11th, 2009 10:21 AM by Lehel Szucs
A new report scheduled to be released tomorrow from on-line foreclosure sale site, foreclosures.com, claims a “California Comeback” is well under way.
The site claims foreclosures completed in January were down more than 25 percent from December “as government and lender programs combined with low interest rates and low housing prices to slow completed foreclosures.” Foreclosures in California, it says, fell more than 31 percent.
Some of the indicators do show that sales are coming back in some of the hardest hit parts of California, Florida, Nevada and Arizona, as investors start anticipating a bottom. Low prices are also allowing some buyers previously priced out of the market to get in. We all know you can never sell at the peak and you can never buy at the bottom, but the game is to get as close as you can, so that’s a good sign.
But I can’t help but notice that the study leaves out a couple of critical facts, first and foremost that California passed a new law last fall that delays the foreclosure process, not to mention that several banks, lenders, even Fannie and Freddie, instituted temporary foreclosure moratoria in the last few months, that would have stemmed the tide as well. In other words, it ain't over 'til it's over.
Today we’re being told that in addition to the foreclosure relief in the stimulus plan (slowly making its way through Congress) the Treasury will dedicate $50 billion for loan modification and foreclosure prevention. No exact details on that yet, but bottom line, if you don’t fix the foreclosure problem, you don’t save housing, plain and simple. There are simply not enough bottom feeders out there to do it alone.
I am, believe it or not, encouraged to see the sales rising and inventories falling in some of the hard hit areas, but with job losses increasing, I don’t think we’re seeing the end, as some might predict. As former HUD Secretary Steve Preston said on CNBC today, “keeping and creating jobs is as important to foreclosure prevention as anything out there now.” That’s because it’s not all about the mortgage resets anymore, it’s about the loss of income to thousands and thousands of homeowners.