Heat Wave Rages as Foreclosures Burn through Imperial County in Southern California

Imperial County, CA - Triple-digit temperatures blast through as the heat wave continues to melt homeowners throughout California as they continue to get pummeled with record number foreclosure notices. Southern California areas such as Inland Empire and the Lower Desert regions seemed to be amongst those hit hard by the intense foreclosure heat.

Stemming from loose underwriting standards, a hunger to satisfy Wall Street investor demand, and buyers not wanting to miss out on speculative double digit appreciation the peak market cycles that made 2005 a boom in the headlines are today's bust times of 2008.

In Imperial County California, the most south-eastern county in the State and often referred to as a bedroom community of San Diego, recently experienced another recording setting month in foreclosures, according to residential housing specialist Frederic A Din who provides this report. Imperial County California is made up of several cities and small towns which include, Brawley, El Centro, Calexico, Calipatria, Heber, Holtville, Imperial, Westmorland, Niland, Seeley, Salton City and surrounding areas.

"Home prices are down as much as 40% since the market peak of 2005 and 2006 making homes more affordable to home buyers in today's market", said Frederic. "Foreclosures are happening to different people due to a variety of reasons however the buyer of today will be in a tremendous position for long term sustained homeownership."

Imperial County "borrowed" many of its home buyers from the future who are now defaulting today as they took advantage of artificially low mortgage payments gambling on continued appreciation to bail them out before their adjustable rate mortgage sky rockets. As such many of these present future home buyers did not verify their income, which hinders their ability to continue making monthly mortgage payments.

"Unfortunately without continued appreciation and increased equity these ‘from the future' borrowers were unprepared for the $400 to $600/monthly payment jumps they felt as their loan adjusted upward."

While monetary indexes attached to adjustable rate mortgages are relatively low from years past, these explosive and often predatory loans sent interest rates surging from 6.00% to 9.00% during the first adjustment, often times with additional increases of 1.00% within the next six months. Moreover many of these loans had early payoff penalties attached to them making the task of refinancing impossible adding a double-whammy to homeowners already caught in the mercury of foreclosure heat wave.

The heat wave of foreclosures coupled with rising gas prices, increased food costs, and more expensive electricity during the summertime in Imperial County, makes the average household budget tighter to manage in an ever uncertain time. Many people from San Diego purchased homes in Imperial County while commuting due to the high cost of homeownership in San Diego, have altogether abandoned the practice due to the high cost of fuel, wear and tear on their vehicle and long hours traveling.

Notice of Default or NODs, the first step in formal foreclosure proceedings increased a total of 6.29% in the second quarter ending June 30, 2008 over the first quarter of the year. A total of 747 notices were filed according to records reviewed from the County Recorders office, while a total of 700 notices were filed as of March 31, 2008.

Notice of Defaults increased a total of 136.43% from the same period last year ending June 30, 2007 based on a total of 612 notices filed compared to 1,447 notices filed this year to date. This is another record setting pace of the foreclosure heat wave to strike the region.

Notice of Trustee Sale or NOTS, the next step in the formal foreclosure proceedings increased a total of 35.66% in the second quarter ending June 30, 2008 over the first quarter of the year. A total of 544 notices were filed according to records reviewed from the County Recorders office, while a total of 350 notices were filed as of March 31, 2008

Notice of Trustee Sales increased a total of 229.89% from the same period last year ending June 30, 2007 based on a total of 271 notices filed compared to 894 noticed filed this year to date.

All notices from 2007 totaled 706 which are dwarfed by the filings in the first two quarters of 2008 with a 21.04% increase so far this year. Based on these preliminary numbers, Notice of Trustee Sale notices are expected to more than double by year-end to about 1,500.

What Steps Can be Taken to Cool the Foreclosure Heat Wave?

There are steps homeowners can take to help offset and curb foreclosures from affecting their family. These steps are easy to implement but not for the fainthearted.
Note: the following steps are not specific legal advice and results vary which cannot be guaranteed.

It is recommended that you review your budget carefully and document your spending habits using a special notebook or computer spreadsheet to keep a log of income and expenses. Once your budget is fine tuned, ensure minimal use of credit cards or other debt. It's best to not use any new credit cards or apply for other debt at this time. Use the newspaper to find specials at the grocery store and lump shopping trips together to avoid using additional gasoline. Cut out monthly subscriptions that are not completely necessary at this time. Curb the use of services you could do yourself such as lawn care, household cleaning, dry cleaning, or others to cut down.

By focusing on the important items within your family and lifestyle you should be able to weather the housing storm and protect your largest and greatest asset.

However if after reviewing these items you determine it would be best to get out from under the liability of the mortgage, consider a short sale type of home sale with a professional who can help. Short sales are a special situation package submitted to your lender(s) indicating you are not in a position to pay the mortgage(s) and you must sell the home in order to continue meeting your other expenses but realize the home is not worth the amount owed to payoff the loans.

This is where your budget review from earlier will come into play as you prepare your short sale budget and the hardship letter you'll provide to those assisting you in selling your home. The lenders loss mitigation department will review your documents and short sale package to ensure you have a viable case. In the end, the lenders does not want to own the home, they want to curb their loss early and through a short sale they are often able to accomplish this goal and you are able to salvage your credit history without a foreclosure blemish on your record.

Although a short sale can seem complicated and tedious it is the best overall solution to protect your credit history and future home buying power.

If you have any questions, please do not hesitate to contact me for additional information, guidance or assistance.