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East County foreclosures up over 106 percent
By Greg Eichelberger
The Alpine Sun
EAST COUNTY — Some pundits claim that,
like a self-fulfilling prophecy, or just a bad catch-22, bad
news about the alleged poor economy seems to bring forth bad
news about the alleged poor economy. Others, however, say the
handwriting is already on the wall.
Indications of that latter opinion are the newest
numbers released by DataQuick Information Services, which show
that foreclosures (or filed notices of default) in the East
County rose from 1,553 in 2006, to 3,197 last year.
That’s an increase of 105.9 percent, while trustee
deeds filed were up over 309 percent (308 to 1,260). In
individual communities, the biggest jump took place in the
Grossmont area of La Mesa (33 foreclosures reported in 2006 to
99 last year, an increase of 167.6 percent) and Lemon Grove,
where 109 foreclosures were reported in ‘06 to 260 in ‘07, a
percentage increase of 138.
The highest number of foreclosures in the East County
was Spring Valley (ZIP Code 91977) which recorded 366 (up from
189 during the same time period two years ago.
The increase was a bit less — about 95 percent — in San
Diego County, with 3,150 notices of default in 2006 compared to
6,1512 in ‘07. Statewide, the number of mortgage default notices
filed against California homeowners jumped last quarter to its
highest level in more than 15 years.
Lending institutions sent homeowners 81,550 default
notices during the October-to-December period. That was up by
12.4 percent from 72,571 the previous quarter, and up 114.6
percent from 37,994 for fourth-quarter 2006, according to
DataQuick Information Systems (DataQuick, a subsidiary of
Vancouver-based MacDonald Dettwiler and Associates, monitors
real estate activity nationwide and provides information to
consumers, educational institutions, public agencies, lending
institutions, title companies and industry analysts).
“The problem here is that political pressure from
Congress and the greed of some lenders led to this sub-prime
crisis,” said Rick Alexander, an East County developer, investor
and broker for over 30 years. “There was pressure put on lenders
to loan money to people, who, quite frankly, were in no position
to receive them. The chickens are now coming home to roost
because these were just bad lending policies.
“Now Congress wants to put a Band-Aid on the problem,
which will most likely be over before the action it took takes
effect.” Alexander expects the number of mortgages to peak this
year, bottom out and return to normal in 2009.
“Perception is a big problem here,” he added. “People
read about all of this bad economic news, they don’t buy things,
people lose their jobs and we start all over again. The fact is,
in California, people are employed, businesses are making money
and the economy is doing well. The housing market is down, but
that’s cyclical. We’ve had downturns and upturns; it will happen
again and again.”
Alexander claims that people are scared right now
because they cannot see the end of the tunnel, but that there
also some incredible deals on homes out there. “It’s a big-time
buyers market,” he said.
Along with the foreclosures, the housing market, while
not exactly hitting rock bottom, has nonetheless gone quite
soft. The median price paid for a California home peaked at
$484,000 last March and declined to $402,000 by the end of 2007,
although some of that decline was caused by significant shifts
in the types of homes that were sold.
In San Diego, the average price of a home fell from
$495,000 in December 2006 to $430,000 in December 2007, a
decrease of 13.1 percent, one of the highest downturns in the
state.
Most of the loans that went into default last quarter
were originated between August 2005 and October 2006. The median
age was 22 months, up from 15 a year earlier, indicating that
the pool of at-risk home loans is getting larger.
“This really hurt those who were investing — or
speculating — in real estate,” said Ron Pennock, president of
the East County Business Council.
“They assumed the market would keep going up and up,
but it didn’t. When home prices leveled out or dropped, they
found they owed more than their houses were worth. Foreclosure
was the only way out for some.”
Both Alexander and Pennock are optimistic about an
economic swing back to the positive, but both encourage
borrowers to be cautious.
“Before foreclosure becomes the only option, borrowers
need to contact their lenders and try to work things out,”
Alexander said. “Many times there are other solutions, but you
can’t be too late to try and come to a compromise.”
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