You've Got Mail!!!

that's what a lot of Californians are finding in their In Boxes as Foreclosure Rates Soar.

Not since the bad old days of the early/mid ninties have so many hit the bricks with so much bad debt. All that buying frenzy that was pumped up last summer is now coming home to roost, or not home, since most of the buyers are soon going to be out of their houses. For those on the things are looking up bandwagon, waiting for that biiiiiig bounce back to the glory days..well don't count on it since 53 THOUSAND foreclosed houses is butt load of inventory to unload.

A total of 53,943 "notices of default" were recorded statewide last quarter, up 15.4 percent from first quarter, and 158 percent from the April-to-June period in 2006, according to DataQuick Information Systems. The notices are the first step in the foreclosure process, and are typically sent to homeowners who've failed to make their mortgage payments for a few consecutive months.
"A lot of the loans that went bad last quarter were made at or just beyond the cycle's peak," between summer 2005 and summer 2006, said Marshall Prentice, DataQuick's president. "Appreciation rates for most of that period were in the double digits and lenders let many households stretch their finances to the max, and beyond. It's that pool of `beyond' mortgages that the market is working its way through."
Yeah, in other words look for prices to go back up sometime around the time of the next Ice Age.

So what exactly is the percentage of rise in those little pink notices tacked to the door? Try 799% more than this time last year. That's what the LA Times is reporting.




That's a hella lotta homes just sitting out there, and it isn't just the housing market that's feeling the pinch. It was more than Rupert Murdochs' pending take over of the Dow-Jones and the WSJ that sent the market into free fall yesterday.

A sagging real estate market and tighter lending standards are exacting a growing toll on Californians, forcing them from their homes in record numbers, figures released Tuesday show.

Foreclosures soared to 17,408 for the three months ended June 30, an increase of 799 percent from the same period last year. The current rate handily exceeds the previous foreclosure peak set in 1996, when the state was in the final throes of six-year slump.

Separately, Countrywide Financial Corp. -- the nation's largest mortgage lender -- reported a sharp rise in delinquencies, even among customers with good credit. That sent shivers down Wall Street, helping to trigger a 226-point plunge in the Dow Jones industrial average.

So what will all this mean for the rest of us out there who may not have participated in this bubble? Nothing good I venture to say.


"The economy will bend further under the weight of the mounting housing and mortgage problems, but it will not break," said Mark Zandi, chief economist at Moody's Economy.com.

That's what passes for optimism these days. Others are more downbeat.

"All the artificial stimulus housing gave the economy is going to go away," said Rich Toscano, a financial adviser with Pacific Capital Associates in San Diego who runs the popular Piggington.com real estate Web site. "There will be individual pain for people who made the wrong decisions. We all may end up in a recession."

Hey, don't sugar coat it or anything.

The good news, as seen by Toscano: "I don't envision a 'Grapes of Wrath' scenario where we all have to pile in the family car and look for harvesting work."

Wow, I like feel sooooo much better.

The other factor at play here, is this doesn't just affect the high risk borrower, it goes waaaaaaaay beyond that, as many have said it's moving into Alt A paper.

"In the beginning, we were thinking the foreclosures were going to be limited to low-income, high-minority neighborhoods targeted by predatory lenders," Cadavid said. "Now we're seeing a shift to the middle class."

That assessment was bolstered by Countrywide's warning that a rising number of its mortgage customers were behind in their payments, including mainstream borrowers.

The Calabasas-based company said that 4.6 percent of its good-credit customers with lines of credit or home equity loans were at least 30 days delinquent, up sharply from 3.8 percent three months ago. A year ago, the rate was 1.8 percent.

So for those who have been talking about a "soft landing" and things "rebounding", look out below!