California's Foreclosure Crisis

Many California home owners are indeed melting into a foreclosure crisis.

I have read many posts lately about keeping things positive. If you are one of the *84,375 California residents who had their home repossessed by their lender in 2007, I think you would agree, a positive spin on the situation is hard to find.

*This is a 565% increase from the 12,672 in 2006, according to DataQuick Information Systems.

For those looking for the positive spin, we can be thankful it wasn't a 1000% increase.

In addition, default notices, the first step in the foreclosure process, also hit record highs in 2007 and another statistic showed that default notices are increasingly more likely to turn into foreclosures. Only 41% of homeowners in default were able to pursue solutions that would allow them to keep their homes, compared with 71% a year ago.

What does it all mean:

• If you are having problems making your house payment do not bury your head in the sand and hope things will get better. Call your lender and see what options you have available to you.
  
  
• If you are an agent, ask potential seller's if they are behind in their payments. You may be dealing with a short sale situation and you are better off knowing that up front.
  
  
• If you are a home owner, you would be wise to keep your equity intact. Equity is an ambiguous thing. You probably had a lot more of it two years ago than you have today. What if you have to sell unexpectantly and used up all your equity in 2005 when your home was worth more? You would either have to, 1. Bring cash to closing, or 2. Negotiate a short sale with your bank, which is not a fun process and there are no guarantees they would comply with your request for a short sale.
  
  
• If you find you have to sell and are in a short sale situation, it would be good to use an agent who has completed a short sale transaction.
  
  
• If you are a buyer, get pre-approved by a reputable lender and ask a lot of questions (ask friends that purchased homes and have not become a statistic, which lender they used). Make sure if you are looking at an adjustable rate mortgage that you will be able to pay the payments if, heaven forbid, it fully adjusts.

There are practical ways to avoid becoming part of the foreclosure crisis in California, be active, work with a real estate professional and don't use your home to fund your lifestyle.

Del Norte County...The Other California
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