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California Homeowners Can Stop Foreclosure with Loan Modifications, Forensic Loan Audits and Negotiated Mortgage Loan Modification Terms.
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11 Aug 09 California Foreclosure Crisis Not Over

Unfortunately quite often, the same case could be made for loan modifications, because we are seeing a 50% failure rate for California loan modification plans. So to tune out the noise, just look at the 90-day rate. In article posted by Mathew Padilla, he discussed the second wave foreclosure wave coming in Southern California.

Sam Khater, senior economist, First American CoreLogic. “To say there is a second wave implies the existing wave has receded,” Khater told me. “I don’t see that the wave has receded.” Khater shared his historical data of 90-day delinquency rates for Orange County, as well as the foreclosure-in-process rates and rates of REOs, or foreclosures on banks’ books. The 90-day rate includes all outstanding 1st mortgages at least three months late but not yet foreclosed. The foreclosure rate is just 1st mortgages with a notice of default or trustee’s sale filing.

If you look at the 90-day rate it has been heading straight up it has not scaled back. Khater also said the California foreclosure rate and REO rates have been impacted by government tinkering in the market. He said federal and state efforts have mostly delayed foreclosures, preventing few.

In Khater’s view it shows “one giant wave.” Local State and Federal loan modification programs have helped thousands of borrowers keep their homes, but in some cases the mortgage relief was simply delaying the inevitable loan default that will push the homeowners out with a legal foreclosure.

Mathew Padilla elaborated more the 2nd-wave of foreclosures looming for so-Cal neighborhoods. He said it’s based on the idea that there has been a lull in home “foreclosures and the big second and maybe third or fourth waves will come as low introductory payments end on various types of adjustable-rate loans.” Credit Suisse released reports with graphs highlighting significant of resets and interest rate recasts in 2010, 2011 and 2012.

Industry insiders have already discussed that defaults remain high for negative amortization option ARMs. The report reminds us that we need not wait for the adjustable rate loans to adjust, because many of them are already defaulting. If you are a homeowner seeking a loan workout make sure that you contract with a reputable law firm or loan modification company. Ask about their refund policy, in case the lender rejects your request for a loan modification.

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