Foreclosure1 Blog

Headline after headline is hitting the stands – mortgage money dries up, sub-prime quicksand, Federals bailing out big lenders and so on. What does it spell to buyers? One of the most affected areas of north California is Stockton that ranks first in the foreclosure race.

Mountain House is a large grassy flatland area near the Bay and a stone’s throw from Stockton. The locale is big enough to sit pretty with 48,000 housing units. In Stockton there have been 8,000 foreclosure listings this year – that is one for every 27 houses. 80% of the houses listed are in some kind of foreclosure trouble.

Tracy, which is near Mountain House and is part of Stockton metropolis, has 1,000 foreclosures out of 25,000 units. Of these 45% are in acute distress. The irony of the situation is that the equity on the property is less than what the owner owes to its debtor. In this situation will any lender be willing to come forward with a loan? Doubtful! The usual practice for small mortgage brokers to sell their mortgages to the banks.

For instance Fireside is dealing with about 500 banks. Some of these small brokers have closed shutters. Today new loan applications will be forwarded to banks but there is a long waiting list. There is no guarantee that the long wait will bear fruit. One such application had to knock on the doors of 40 banks before anything got going. Even if it gets the green signal the rate will not be at par with the current one. To be a borrower today there are certain prerequisites.

First and foremost is clean credit history. Secondly be ready to dish out down payment to the tune of 10% to 20%. The next important point is to contact the right lender – those who have an edge over others and move freely in financial circles. Fourthly comes the hurdle of income verification. Last but not least the borrower must have tons of patience and hope.

With federal rate cut the market might surface from the lowest point it had sunk in the last 40 years but it will take about a years time to be steady. The balance might tip over any time if there is a job cut or recession. So buyers should not wait indefinitely but make hay while the sun shines.

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