Foreclosures in Imperial County: July 2008 a New High Record Month
By Frederic A Din

In my entry from three months ago  the number of Notice of Trustee Sale and Notice of Default both listed as Foreclosures set a record during the month of April 2008.  You can read that post here: http://activerain.com/blogsview/494587/Imperial-County-Foreclosures-Hit 

Imperial County logged the largest amounts notices in both stages of foreclosure activity to date.  According to data analyzed and reviwed from the Imperial County Recorders Office, Notice of Default filings or NODs were up just over 6% from June and up over 100% from the same time last year, July 2007.  NOD filings were at their second highest level in a single month with 255 filings, while the record of 268 NOD filings took place in April 2008.

Notice of Defaults are the first official step in the foreclosure process and are usually sent to home loan borrowers after three or four monthly payments have been missed.  "Typically lenders will send a letter of intent during the first few months of missed payments, while missing more than three payments will cause the Notice of Default to be sent and recorded with the county recorders office", according to a delinquency associate at a large servicing company, America's Servicing Company.  He spoke specifically of California based foreclosures and did not mention any laws or legal advice regarding any other state. 

If the lender hasn't heard from the borrower or payment arrangements have not been made, the next step is to offically sell the home at auction, which is held at the county court house in Imperial County. 

After the time frame has passed on the NOD, usually within 30-60 days, a Notice of Trustee's Sale or NOTS will be recorded and will give notice to the public that the property will be sold to recover money for the bank.  The lender has to publically give notice at least 3 weeks before the sale date and the notice has to be published as a legal advertisement in a publication in the county where the property resides, such as the Imperial Valley Press, Holtville Tribune or Calexico Chronical. 

Notice of Trustee's Sale activity rose nearly 3% from the month of June but was up over 400% from the same time last year in July.  The trend this year has been a steady increase in foreclosure activity over the last few years as more adjustable rate mortgages increase payments to an amount that is no longer affordable and as home values decline making it almost impossible for the borrower to refinance their way out of trouble.  Loan modifications to stabilize monthly payments and short-sale methods of liquidating property seem to be increasing as banks and lenders look to remedies to slow down the amount of real estate owned property they accumulate. 

July showed a total of 212 Notice of Trustee Sale filings for the month which is a record of filings in a single month this year.  The total number of foreclosures in all stages totaled 467 filings, which includes both NODs and NOTS for the month of July.  More than likely 90% or more of all 212 NOTS filed will end up on the books of lenders as an REO or BankOwned property. 

"REO properties are a non-performing asset that weigh heavily on the bank/lenders balance sheets", said Frederic Din speaking of his former collection/loss mitigation days when he held foreclosures on the books for Government Agencies FCU.  "...there was always pressure from Sr. Management to perform by selling these REO assets quickly and for the least amount of cost to ultimately reduce the expense of carrying the asset and having to worry about safey and vandalism concerns, which errodes property values". 

The US Government is trying to make remedies to homeowners available through several new initiatives including FHA-Secure and improved loss mitigations techniques such as loan modifications and forebarences. 

According to the data reviewed at publication time, mortgages that were taken out in 2006 which are being foreclosed upon in July account for just over 60% of all foreclosure activity.  This fact alone mirrors the study conducted by the Consumer Federation of America indicating that Imperial County home loan borrowers took out more subprime and piggyback loans in 2006 than any other county reviewed in the study.  You can view the story here: http://blog.homeloans.cc/2008/04/27/poorest-california-county-ranks-highest-for-subprime-lending.aspx

"We clearly have people with limited income capabilities being put into subprime adjustable rate mortgages and other piggyback loans that were beyond their means to begin with, however many just bought too much house since they were told they could and they dream of Homeownership.  The difference is they were led into loan programs that would ultimatley crush their dreams when the teaser periods of their adjustable rate mortgages increased 1% to 3% and went from "interest only" to fully amortized (principal and interest), thats quite a payment shock and most people simply can't afford to keep it up for too long thereafter", said Frederic A Din.

To give you an idea of what housing payments are deemded affordable using a conservative 40% debt ratio, which means the total of all monthly credit obligations such as car payments, credit cards, personal loans, non-deferred student loans, and the mortgage payment divided by gross income should not be much over 40%, I am including a graphic showing examples of house payments and sales prices using an average rate of 6.25%.



The rise in foreclosures is a normal course of action given the loose lending guidelines that were so prevelant during the years of 2005 and 2006 as demand for mortgage debt swept through the industry like wildfire.  From the credit rating agencies who provided their A+ grades, to wall street investors who packaged up the loans into the securities purchased by school districts, municipalities and foriegn countries, to the lender who enticed loan officers with generous commissions to the borrower who wanted their dream home now, were all a perfect storm when subprime lending and piggyback loans hit their apex. 

These two years for the Imperial Valley also showed a significant number of transactions completed in both terms of purchase mortgages and refinance activity, both with real estate values at the peak.  According to sales data collected and reviwed, the real estate market peaked in price during late 2005 and carried throughout the first quarter of 2006, with some moderate slow down into the second quarter.   

Mortgage loan statistics obtained for this article showed that Imperial County recorded over 4,200 purchase mortgage and refinance transactions during the years 2005 and 2006. 

Foreclosure activity two years later indicates that a large percentage of loans from 2005 weren't able to be refinanced into a lower rate or payment and subsequently the owner lost their home.  A slight increase amount in foreclosure activity is set to take place in 2008 as loans from 2005 those 3/27 loans and 2006 those with 2/28 will begin to adjust upward into higher payments and less favorable terms. 

Also on the horizon this year will be those LOW rate 5/1 ARMs from the market bottom in 2003 that will begin to reset this year.  Most of these home loan borrowers were "A Plus Paper", however when your monthly payment increases 25% to 35%, many of these payments will also become unaffordable.

If you find yourself in trouble and need foreclosure assistance, please visit my Foreclosure Help site which is found at www.homeloans.cc/fchelp.html or contact me for more information.  There are remedies and changes taking place in the industry to help those who want to keep their homes and those who are able to afford the payments. 

I am able to offer my clients a variety of home loan solutions to help their needs from government loans, such as FHA and VA, to conventional loans, to consolidation loans. 

We are here to help those whose credit isn't perfect, we have relationships with paralegals and attorneys who will help you boost your credit score 25 to 50 points or more within 30 days.  These paralegals will also work with you to clean up your credit report to increase your credit score within 90 days to ensure you qualify for the best financing available to you.  Credit repair plans are affordable with monthly payments plans starting as low as $1.30 a day.  Most clients are able to improve their credit score in less than six months, while some show a dramatic improvement within 90 days 

Let me know how I can help you or those you know. 

Thank you, Frederic