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Low Prices Major Driver of California Foreclosure Investing

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By : John Cutts    99 or more times read
Low prices will continue to be a major driver of California foreclosure investing efforts, based on the statements of analysts studying the California property market.

The analysts contended that home prices will continue to fall or remain flat in many areas. Upticks in prices will be slight, according to them. The major reasons for continued price fall throughout California, according to the analysts, are the increase in mortgage loans delinquent by 272 days, lack of jobs, increase in FHA defaults, resetting of ARM loans and record numbers of borrowers no longer paying their loans but whose records are not yet included in reported foreclosure data.

Other factors like the decision of the Federal Reserve to stop its mortgage securities purchase program and the end of the federal tax incentive program are additional issues that can weaken the California market.

According to a research firm, the severity of mortgage delinquency in California has worsened. In the early months of 2008, homeowners in default by more than three months but not yet notified of foreclosure were delinquent by only 204 days. Now, these types of borrowers are delinquent by 272 days.

Similarly, delinquent borrowers in 2008 who have already received notices of foreclosure were in default by 260 days. Now, these homeowners facing foreclosure are already delinquent by 410 days.

With loan delinquencies getting graver and graver, it is expected that more mortgages will fall into foreclosure and more homes will be available for people engaged in California foreclosure investing. Prices will also be favorable for these investors as most areas in California are still buyers’ markets.

Unemployment – the major factor for foreclosure in many markets now – is just a number when posted. But it can be illustrated concretely by the large number of professionals lining up for jobs in theme parks. In the past, theme park jobs were only for students and teenagers. Now, they are desired by mortgage agents, construction workers and other college graduates who cannot find work elsewhere.

High FHA mortgage delinquency rates in California also portend more foreclosures and lower home prices. The number of FHA borrowers delinquent by three months or more has soared by more than 62 percent over the past year.

According to a California mortgage survey, there are 5,290,276 mortgaged homes in California and more than 15 percent of these are already in foreclosure. This figures show that there are almost 795,000 housing units available for people committed to foreclosure investing in California, with many of these units already in the market.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.

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