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Friday, February 23, 2007

Foreclosures: "At the beginning of this cycle”

by Calculated Risk on 2/23/2007 03:27:00 PM

From the San Diego Union: Lenders told foreclosure picture grim

Mortgage professionals who are struggling with a national spike in residential foreclosure rates were warned yesterday to expect more of the same in 2007.

Unemployment, mortgage fraud and speculative buying are among the factors behind the recent surge in filings, experts said at a conference of the Mortgage Bankers Association.

And this year $1 trillion in adjustable-rate mortgages are due to reset before Dec. 31.

“This is really a wild card,” said Rick Sharga of the Irvine firm RealtyTrac. “We don't have a precedent.”
Record inventories (see previous post) and rising foreclosures in 2007 is two of the keys to my 2007 housing predictions.

Mortgage attorney Daniel D. Phelan echoed Sharga's concerns.

“I personally think we are at the beginning of this cycle,” he said. “It is going to get worse before it gets better.”
The following graph shows Notices of Default (NOD) by year in California since 1992.

Click on graph for larger image.
Home mortgage loans in California went into default last quarter at the highest rate in more than eight years, according to the DataQuick Information Systems research firm. Lenders sent notices of default, the first step in the foreclosure process, to 37,273 California homeowners during the fourth quarter.