Our Real Estate Blog

Talking Points (1)

June 4th, 2008 10:18 AM by Lehel Szucs

Will government and private initiatives aimed at saving troubled borrowers be enough?  A State Foreclosure Prevention Working Group comprised of attorneys general from 11 states reports that 70 percent of homeowners at least two months behind on their mortgage payments are not receiving any help whatsoever.  According to the study, the number of loan modifications made by loan servicers increased by 50,000 between October 2007 and January 2008, but the number of loans that were 90 days of more delinquent grew by 90,000 over the same period – a gap of some 40,000.

Recent numbers coming out of the Sacramento area indicate some modest signs of improvement in the real estate market.  In mid-April, pending sales in El Dorado, Placer, Sacramento and Yolo counties reached their highest level since 2005, which seems to indicate the market is finally burning off some inventory.  Proof?  Inventory has declined to the 13,000-unit range, the lowest in a year.  On the new home front, a flattening of home sales (albeit at the lowest levels in a decade) may be a blessing in disguise.  As one observer noted:  “One way to look at it is that the region just wants to get this over with now, an entire market ripping off the Band-Aid instead of pulling it off slowly.”

Subprime loans are within months of becoming much less of a problem for California, according to a report from First American CoreLogic that says the rate of mortgages subject to large interest rate re-sets should begin to slow dramatically by the end of the year.  That said, California hasn’t yet experienced the full impact of so-called “Alt A” loans and Option Adjustable Rate Mortgage borrowers, some of whom have been electing to make lower payments during an initial period with the balance added to their monthly payment when the loan adjusts.  That may be the next shoe to drop, according to Credit Suisse.

Posted in:General
Posted by Lehel Szucs on June 4th, 2008 10:18 AM



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