February 27, 2007

SACRAMENTO, CALIF  — In January of 2007 home and apartment construction fell by more than 14 percent according to the U.S. Commerce Department.  This figure indicates that activity has been slowed down more greatly than anytime since August of 1997.  By contrast, the pace for the same time period in 2006 was almost 38% faster.

Economists, real estate professionals, investors, and homeowners alike have been watching the residential housing sector the way farmers look to the sky for rain, but so far there are no clear indications that the bottom has been found in the market.  Following a five year boom in housing prices, the current slowdown in housing starts is another factor that causes many market watchers to hesitate before declaring an end to downward sliding prices.

Oversupply of new homes and existing homes has led many homebuilders to offer free upgrades to entice coy homebuyers to purchase their offering in a crowded marketplace.  According to David Seiders of the National Association of Home Builders, “the percentage of builders trimming prices has been increasing, and the use of non-price incentives is expanding as well.”

Another commentator, Mark Zandi, of http://www.economy.com, said “this market will not find a bottom until this inventory is worked off, and the only way for that to occur is through further price declines.”

The effects of oversupply and lowered demand are having an effect on homeowners in the Western U.S.  According to Patrick McGilvray, J.D., President of Sacramento, California-based http://www.TheHomeBuyingCenter.com, “When homeowners who want to sell their houses fast are forced to compete with major homebuilders who can offer major discounts or free upgrades they are at a disadvantage.  And since sales of existing homes make up approximately 85% of the single family home marketplace, this situation impacts a lot of people.”

February 23, 2007

SACRAMENTO, CALIF – California was once part of Mexico before achieving statehood in 1850. Now, according to the research of Professor Dowell Myers of the University of Southern California, the five most common surnames of homebuyers in California in 2005 were all Hispanic. These names include: Rodriguez, Lopez, Martinez, Garcia, and Hernandez.

In Professor Myers’ new book, “Immigrants and Boomers: Forging a New Social Contract for the Future of America,” he makes a case that the future of America’s future economic health well-being are intimately connected with immigrants, especially those coming from Mexico, Central America, and South America.

The immigration debate has long been a contentious one in this country, and, despite anti-immigrant rhetoric and legislation, immigrants continue to play an ever-growing role in the economy and culture of this country.

Henry Cisneros, former secretary of Housing and Urban Development, and current Executive Chairman of City View, had this to say about the book in a pre-release review provided by the book’s publisher, “Dowell Myers has described a future full of hope, if as a nation we are able to understand the power of immigration, to reach understandings about our mutual societal responsibilities, and to unleash the full capabilities of immigrants who want to contribute to American society.”

According to Patrick McGilvray, J.D., President of http://www.TheHomeBuyingCenter.com, “Our nation has been always been dependent on the energy and dreams of immigrants from our earliest days. Many of the people who buy homes from my team of investors across the country are first or second generation immigrants from Mexico or other Hispanic countries. We are very honored to help them achieve their dreams of homeownership in the United States, and we take the long view that they, their families, and their work ethic will enrich America in tremendous ways.”

California’s residential real estate markets, battered in recent months after a spectacular run-up in prices in the early years of this decade, may be very thankful for Hispanic immigrants whose purchases may help shore up the slumping residential housing sector. This trend may even change the minds of those opposed to immigration and immigrants in general, but this cannot be taken for granted because there has always been as much short term opposition to immigrants and immigration, legal and illegal, as there have been positive long-term effects of their presence.

Bankruptcy Attorney Jay Fleischman recently wrote on the internet that my comments in an article were false and absurd (see original article at http://thehomebuyingcenter.com/wordpress  “Bankruptcy Won’t Stop Foreclosure For Troubled Borrowers Forever”). Mr. Fleischman also wrote that “profit is all too often the reason that truth is tossed to the side.” Mr. Fleischman took my words out of context and failed to include the full text of my quotations (see below).

Mr. Fleischman makes his own profits by helping people file for bankruptcy, and it is understandable that he believes that bankruptcy is a debtor’s best solution, but this is not always the case in the context of dealing with the mortgage on their house.

I wrote in my original article:

“at best, bankruptcy can forestall a borrower’s loss of their home, and at worst it can provide a false sense of security. Many borrowers will simply not be able to cure their underlying financial difficulties that led them to default on their mortgage payments, especially if they lied about their income on their mortgage application.”

This quote was not included in Mr. Fleischman’s critique of me, yet it speaks to the core of something he ignores. Bankruptcy does not discharge mortgage debts against a home, but many laypeople believe that it does.

What Mr. Fleischman ignores is that many people, even those in Chapter 13 bankruptcy, will not be able to catch up on their missed mortgage payments by agreeing to and sticking to a repayment schedule that includes currently due and past due amounts.

Especially in California many homeowners, up to 90% according to many experts, lied on their mortgage applications about the amount of income they made. Compounding this situation is the confusing nature of the pervasive Adjustable Rate Mortgage loans (ARMs) that often result in dramatically increased mortgage payments for borrowers after a series of very low payments.

Bankruptcy often serves as a Band-Aid for struggling borrowers and ultimately does not prevent them from losing their homes to foreclosure. Many people who retain an attorney to file bankruptcy for them will in fact lose their homes ultimately to foreclosure and will suffer the negative effects of a bankruptcy such as damage to their credit rating and will be responsible for large attorney’s fees to boot.

People say that sometimes the best telephone call a person in danger of losing their home to foreclosure can make is to a real estate investor who can help them avoid foreclosure and/or bankruptcy without the damage to their credit rating. Real estate investors across the country do indeed have a profit motive in purchasing a home from a borrower facing foreclosure and the ethical among us admit this upfront. We believe in full and frank disclosure and hope that bankruptcy attorneys and foreclosure consultants subscribe to this philosophy as well.

California real estate law guru Robert J. Bruss had this to say recently regarding foreclosures at http://www.washingtonpost.com/wp-dyn/content/article/2007/02/09/AR2007020900965.html :

“Do everything you can to avoid a foreclosure sale. Worse yet, filing for bankruptcy would merely delay losing your home by foreclosure if you are unable to make the monthly payments.”

I consider myself to be in good company when such an esteemed expert echoes my comments and I emphatically reject Mr. Fleischman’s insinuations and misrepresentations about my comments.

Patrick McGilvray, J.D.

President – http://www.TheHomeBuyingCenter.com

February 17, 2007

SACRAMENTO, CALIF – One thing is certain about the residential housing market in the United States today: consumers are confused. This fact is regrettable, but it is true.

One thing that many Americans do not understand about the foreclosure process is that filing for bankruptcy will not permanently stop a lender from foreclosing on a home if the borrower stops making payments. In addition, the process of filing for bankruptcy can be expensive (it’s risky to do it without a trained lawyer’s help, and they don’t work for free) and time consuming.

According to Patrick McGilvray, J.D., President of the Sacramento-based company The Home Buying Center, LLC (http://www.TheHomeBuyingCenter.com), “many people who contact my company think that they can simply file bankruptcy and prevent their lender from foreclosing on their homes. They don’t understand that filing bankruptcy is more difficult these days due to recent federal legislation and that credit counseling and debt repayment programs may be required.”

Mr. McGilvray continued, “at best, bankruptcy can forestall a borrower’s loss of their home, and at worst it can provide a false sense of security. Many borrowers will simply not be able to cure their underlying financial difficulties that led them to default on their mortgage payments, especially if they lied about their income on their mortgage application.”

According to many services who track mortgage loan data as many as 90 percent of borrowers in recent years lied about their household income on their applications. Banks are increasingly looking to tighten their lending practices and are requiring many borrowers, especially those who wish to refinance adjustable rate mortgages (ARMs) into fixed rate loans, to prove their income.

While this change in lending practices may be good for the overall American economy, many borrowers who took out the so-called ‘exotic mortgages’ will lose their homes to foreclosure and will suffer impaired credit scores for years to come.

February 15, 2007

SACRAMENTO, CALIF – On Valentine’s Day in 2007 Auburn Hills, MI based Chrysler announced that it will be laying off 13,000 workers at plants in Michigan, Delaware, and elsewhere.  The immediate impact of this on the affected employees and their families will be serious, and a corollary impact will be felt in the housing sector.

Students of the history of real estate cycles and residential foreclosure rates will be able to make a connection between past examples of how massive employer layoffs can have a ripple effect on home selling prices and mortgage default rates.  It is no secret that foreclosures are on the rise in the United States, and many experts agree that we have not seen an end to the increase in these sad happenings.

According to California foreclosure expert, Patrick McGilvray, J.D., President of http://www.TheHomeBuyingCenter.com, “foreclosure rates are ‘lagging indicators’ that show the impact of economic trends in retrospect.  It can take years for the impact of large-scale job losses to be fully felt in the economy.”

Another foreclosure expert, George Roddy, President of Addison, TX based Foreclosure Listing Service Inc., had this to say about Texas’ residential housing crisis in the late 1980s, “too many people had gotten into homes artificially inflated by the availability of too much money. By the late 1980s people were having trouble selling their homes for what they paid for them.” 

The availability of cheap money has been a prominent theme, and ‘crazy loans’ such as interest only adjustable rate mortgages have grown exponentially in recent years.  Additionally, many borrowers throughout the country are going into foreclosure because they cannot afford their housing payments, and currently owe more than their homes are worth.

Mr. Roddy hd this to say, when asked about today’s statistics, “We’re not yet seeing a slowdown in the foreclosure figures; in fact, we’re seeing higher numbers. Where’s this going to take us? We could be in for a long haul.”

In auto industry dependent Michigan, for example, home foreclosures in January occurred at a 2.5 times higher rate than in January 2006.  The state is among the most deeply affected by foreclosures.  One in every 366 houses there was in foreclosure last month according to California-based RealtyTrac, Inc.

SACRAMENTO, CALIF – America’s battered residential housing sector received a couple more shocks last week.  Two leading residential mortgage lenders saw their stock prices fall as the home prices continued their slump amidst a higher interest rate environment.  According to Sacramento-based http://www.TheHomeBuyingCenter.com the combination of the two above factors is widely credited with forcing many mortgage borrowers into delinquency.

The greatest hit to bank shareholders that occurred in trading on Thursday, February 8, 2007 involved New Century Financial Corp. of Irvine, California.  The common stock of New Century dropped $10.92 per share, or 36.2% after the company reported accounting errors on Wednesday that caused it to fail to track accurately how some of its mortgage loans are going down in value.

Wall Street analysts downgraded the New York Stock Exchange listed company, and the effects of this were felt in the Market on Friday as well. 

Another stock which suffered was that of HSBC Holdings PLC, the biggest bank in Europe.  HSBC is also a major force in the United States mortgage industry, and its stock dropped 2.7% on Thursday to close at $89.78.  Analysts believe that the company needs to put away 20% more money to cover loans that may become uncollectible.  The company itself believes that it may need close to $10.6 Billion to cover these troubled loans.

American foreclosure expert, Patrick McGilvray, J.D., President of http://www.thehomebuyingcenter.com is quoted as saying, “the world really is flat and completely interconnected today.  The recklessness of mortgage banks that loaned money people to buy homes in an insanely skyrocketing residential real estate market while putting no money down and making interest-only payments is coming back to haunt them.”

Mr. McGilvray continued, “as more and more people suffer payment shock as their adjustable rate mortgage readjusts they often vainly attempt to get a home equity loan to help themselves, but this is increasingly difficult to do because they don’t have the increase in their [home] equity that they were counting on.”

This sobering reality was echoed by Merrill Lynch analyst Kenneth Bruce who wrote in a research report, “we expect poor subprime credit trends to continue at least through 2007 and into 2008,”

SACRAMENTO, Calif. America’s battered residential housing sector received a couple more shocks last week. Two leading residential mortgage lenders saw their stock prices fall as the home prices continued their slump amidst a higher interest rate environment. According to Sacramento-based http://www.TheHomeBuyingCenter.com, the combination of the two above factors is widely credited with forcing many mortgage borrowers into delinquency.

The greatest hit to bank shareholders that occurred in trading on Thursday, February 8, 2007, involved New Century Financial Corp. of Irvine, California. The common stock of New Century dropped $10.92 per share, or 36.2% after the company reported accounting errors on Wednesday that caused it to fail to track accurately how some of its mortgage loans are going down in value.

Wall Street analysts downgraded the New York Stock Exchange listed company, and the effects of this were felt in the Market on Friday as well.

Another stock which suffered was that of HSBC Holdings PLC, the biggest bank in Europe. HSBC is also a major force in the United States mortgage industry, and its stock dropped 2.7% on Thursday to close at $89.78. Analysts believe that the company needs to put away 20% more money to cover loans that may become uncollectible. The company itself believes that it may need close to $10.6 Billion to cover these troubled loans.

American foreclosure expert, Patrick McGilvray, J.D., President of http://www.thehomebuyingcenter.com is quoted as saying, “The world really is flat and completely interconnected today. The recklessness of mortgage banks that loaned money people to buy homes in an insanely skyrocketing residential real estate market while putting no money down and making interest-only payments is coming back to haunt them.”

Mr. McGilvray continued, “As more and more people suffer payment shock as their adjustable rate mortgage readjusts they often vainly attempt to get a home equity loan to help themselves, but this is increasingly difficult to do because they don’t have the increase in their (home) equity that they were counting on.”

This sobering reality was echoed by Merrill Lynch analyst Kenneth Bruce, who wrote in a research report, “We expect poor subprime credit trends to continue at least through 2007 and into 2008.” Patrick McGilvray, JD.

http://today.reuters.com/news/articleinvesting.aspx?view=PR&symbol=+JKHY&storyID=40185+13-Feb-2007+BW

“We Buy Houses” read the ubiquitous signs that appear on fences and utility poles all over the country. These brightly colored eye-catching signs are a form of low-cost marketing for some real estate investors and a nuisance to others. 

In parts of the country the signs are not permitted by local regulations, but not much is usually done about them besides removal. This begs the question: What is it about these signs that appeals to people who call the numbers? 

Some real estate investors use the signs because they say it’s the only way to get people who need to sell a home fast to call them before the property is lost to foreclosure. They also say that people who call usually want to sell a house quickly with no hassles such as fixing and presenting a property to a flood of potential buyers. Sellers also typically don’t want to pay the costs associated with using a realtor. 

For people who want to sell quick cash these signs are, in effect, the marketing equivalent of a check-cashing business. In exchange for making a deal with a real estate investor who can complete a transaction in just a few days the sellers usually agree to sell their properties at a discount from market value. 

Often the house purchased is in poor condition and the owner may be delinquent on his or her mortgage payment. Or, the owner may simply need to sell the property to relocate for a job, deal with a divorce decree, or desires to be rid of a troublesome rental property. 

But, internet-based marketers are, in customary fashion, finding a way to build a better mousetrap in the home buying business. According to Patrick McGilvray, J.D., President of http://www.TheHomeBuyingCenter.com, “most of the `we buy houses’ signs are put up by amateur investors who have recently attended a seminar and who have little experience in the field. Our business model involves selling leads to a large number of investors across the country who want to buy houses in their local areas. The sellers want sell their houses quickly, but they also want to deal with a reputable and established company. We do use some newspaper advertising to attract sellers, but the main source of our leads is people who search for us on the internet.” 

More than $1 trillion in adjustable rate mortgages (ARMs) will reset this year bringing higher monthly payments and a corresponding increased risk of foreclosure to thousands of homeowners, says Patrick McGilvray, president of the Home Buying Center, LLC, a Sacramento firm that buys homes directly from owners.

Analysts are divided on what this change will mean for the American and global economies, but many families and commentators are worried, says Mr. McGilvray.

Many Californians, and their counterparts in the rest of the country, live paycheck-to-paycheck and, because of unrestrained credit card spending, actually spend more than they make every year, he says.

He points to statistics from real estate information company DataQuick Information Systems of La Jolla that say in 2000 only 18.9 percent of homebuyers in the Sacramento region purchased properties using ARMs. This number dropped in 2001 to 12.1 percent, but spiked to 65.1 percent in 2004, and 72.8 percent in 2005. The number for 2006 was 62.5 percent.

ARMs were created for sophisticated buyers who planned to live in a given house for a few years, but their use has mushroomed dangerously, he says.

“Offering people long-term credit secured by a mortgage on a single family home has been one of the tools that helped fuel the American dream of home ownership,” says Mr. McGilvray. “In recent years though, this tool has become perverted and only a very few will ultimately profit. In years past people could not buy a home until they showed that they had the discipline, or luck, to be able to provide a 20 percent deposit on the home they wanted. I believe that 100 percent financing arrangements and the proliferation of ARMs will ultimately hurt the American consumer and our economy as a whole.”

The deterioration in fiscal responsibility of average Americans has been a trend for a long time, but in recent years the skyrocketing value of homes in the West, especially the Central Valley, Mr. McGilvray says.

http://www.centralvalleybusinesstimes.com/stories/001/?ID=4188

February 8, 2007

SACRAMENTO, CALIF — During the past several years in housing markets on the East and West coasts many people purchased homes that were more expensive than they could afford because they believed that they could always sell their house for a profit if their financial situation worsened. Unfortunately, for thousands of these homeowners these plans are not working out as expected.

For many people an adjustable rate mortgage was the only way they could secure a low enough monthly payment, in the short term, to afford a home. Skyrocketing home prices created a boomtown mentality and first-time homebuyers felt that if they did not get into the market they might never be able to do so. According to experts such as Patrick McGilvray, J.D., President of http://wwwTheHomeBuyingCenter.com “the chickens are beginning to come home to roost and many people who borrowed money to buy homes are suffering from payment shock as their monthly payments jump significantly. Furthermore, people who want to sell their house fast cannot do so because the residential real estate market has slowed considerably.”

Mr. McGilvray is referring to what happens when an adjustable rate mortgage’s intial low interest rate period expires and the loan readjusts. Many policy experts and government officials are calling now for an analysis of a borrower’s ability to pay their mortgage when it readjusts, not just during the initial period.

According to the Mortgage Bankers Association, 12.5 percent of riskier mortgages were delinquent in the fall of 2006 and that almost 1 million homeowners across the country lost their homes to foreclosure or missed their monthly payments from July to September.

Pam Canada, executive director of NeighborWorks Home Ownership Center in Sacramento, said of people like this, “The market did not save them…This was a nightmare with no happy ending.”

Ed Smith Jr., CEO of Plaza Financial Group, Inc. of San Diego, California said of the mortgage industry, “Lenders and brokers defended the creative loans, noting that they have helped hundreds of thousands of families own their own homes. The problem is that many consumers have not prepared an exit strategy.”

Further complicating the residential housing picture is the fact that almost half of the consumers in the United States think that a housing price crash will occur in their local real estate market sometime in the next three years.

This information was recently collected during a survey conducted by Experian and Gallup. Experian of Costa Mesa, California reported that the 47 percent of Americans who feel a crash is likely is up sharply from the 37 percent who felt this way in May of 2005 and the 42 percent who said the same thing in April of 2006.

Experts estimate that 90% of people who secured a mortgage loan based on ‘stated income’ in the past several years lied about their income. When a rational observer considers this in the context of a rising interest rate environment, and stagnant or falling home prices her or she must assume that we are seeing the early edges of what could be a very destructive economic hurricane.

(CBS 5) ELK GROVE The ripple from a slow housing market consumes a different victim almost daily. In the Belavida subdivision in Elk Grove, brand new homes sit for months.

Desperate to avoid still more losses, home builder Standard Pacific sent upgraded model homes to auction last Saturday with a bargain price tage. “These homes are priced well below anything in Elk Grove,” said Keith McLane of West Coast Home Auctions. “The seller is looking to sell 6-homes very quickly.”

Appraiser Amy Perkins says that ripple has left major banks and mortgage lenders with staggering losses. “There weren’t any short sales, very few for the last 3 years in a row,” Perkins said. “And within a 20 mile radius I’ve been seeing 300 or more.” Short sales are homes offered at well below value, a last gasp before foreclosure.

Mortgage broker Jennifer Miller of Green Valley Mortgage says the banks bear some of the responsibility; they made getting a home loan too easy. “They have started tightening the reigns a little bit and aren’t just saying: just sign on the dotted line and we’ll give you a couple hundred thousand dollar home,” Miller said. “It’s not that simple anymore.” Some will tell you this housing marking is starting to stir again. Others say it won’t recover until late 2008.
 

http://cbs5.com/local/local_story_039211941.html

February 3, 2007

SACRAMENTO, CALIF – Much attention is being given of late to the residential real estate market in California.  One of the hottest topics is the relationship between “exotic” mortgage products and foreclosure.

In the Sacramento area, like in most of California, homebuyers have become dependent on adjustable rate financing programs to buy houses.  Without these products many homeowners would not have been able to purchase homes which have more than doubled in value since 2007.  Whether or not this situation proves to be a good thing for borrowers and the state’s economy remains to be seen, but ominous signs abound.

In 2004 65% of home purchasers in Amador, El Dorado, Nevada, Placer, Sacramento, Sutter, Yolo, and Yuba counties used adjustable mortgages to buy their house.  Many of these loans will “adjust” this year, bringing higher payments.

Some borrowers will not be able to afford the higher payments and will look to sell or refinance their homes.  But, in a falling real estate market, many of these families and investors owe more than their homes are worth.  One option for these borrowers is to utilize a process known as a short sale.

A short sale is accomplished when a borrower, or their representative, negotiates with a bank to accept less than the amount due on a mortgage to settle the debt.  The incentive for the lender is that they avoid the necessity of initiating foreclosure and taking back the house.

Lenders typically do not want to take back a property from a borrower who is in default, especially if the debt is greater than the fair market value of a property.  Lenders often prefer to work out a new payment program with borrowers in default, or those who are about to go into default, but for those who want to sell their house fast a call to an expert in short sales may be the smartest things for homeowners in trouble.

“A short sale can be to everybody’s benefit when borrowers are unable to continue paying their mortgage,” said Patrick McGilvray, J.D., President of http://wwwTheHomeBuyingCenter.Com. “Banks and other mortgage lenders would sometimes rather settle for less than what they are owed than to take back a house in a falling real estate market.”

February 2, 2007

SACRAMENTO, CALIF – Legislators in the capitol recently discussed reining so called “exotic” mortgage products and practices common in the state.  According to the  Associated Press, “California lawmakers on Wednesday began considering restrictions on unorthodox mortgage lending practices that have allowed hundreds of thousands of Californians to buy homes they otherwise could not afford.”

In recent years the trend has been moving away from the traditional 30 year fixed rate loan, and almost half of new home loans in California are so called “exotic” loans.  Among these are adjustable rate mortgages (ARMs), negative amortization loans, and pay-option ARMs.

According to Raphael Bostic, associate professor at the University of Southern California School of Policy, Planning, and Development, “the exposure to these sorts of products, the growth, is unprecedented.  The regulatory oversight of these types of practices is relatively lax.”

Federal bank regulators are concerned that banks need to better analyze borrowers’ abilities to pay the money they owe when utilizing nontraditional and sub-prime loans.  Full and simple disclosure requirements as to loan repayment details are also top their list of concerns.

California state Senator Mike Machado, D-Linden, raised the issues involved with these risky and often misunderstood loans in a state Senate hearing, but no clear call to action has been embraced.

People involved in the mortgage lending industry do not want to see greater oversight of their business practices, and, according to Patrick McGilvray, J.D., President of http://www.TheHomeBuyingCenter.Com, “we’ve seen a sort of Wild West attitude towards selling home loans in California and throughout the country.”

Mr. McGilvray continued, “it is more difficult for somebody to be licensed to sell a small term life insurance policy than it is to get a job selling the most complicated and important financial product most Americans will purchase in their lives, the loan for their home.  I believe that all people who sell home loans should be subject to sensible training requirements, especially ethics.  Salesmanship skills alone should not qualify someone to sell home loans.”

Many Americans are facing foreclosure as a result of being unable to sell or refinance their home loans.  Purchasers of homes often assumed that if their payments increased they could simply sell or refinance.  Unfortunately, in many parts of the country, due to a stagnant real estate market, this option is now off the table.

Más de 37 mil personas en el estado podrían perder su casa

26 de enero de 2007La advertencia de algunos economistas sobre el riesgo que corren cientos de familias que compraron casa a través de préstamos no convencionales, tales como las hipotecas de sólo interés, se está cumpliendo ya en California. En el último trimestre de 2006 unos 37,273 dueños de casa se atrasaron con su pago hipotecario.La mayoría de las notificaciones de impago fueron enviadas a direcciones del sur de California, principalmente en el condado de Los Ángeles.La mayoría de los préstamos hipotecarios que cayeron en impagos el pasado trimestre se originaron entre enero de 2005 y el pasado mes de febrero. Los impagos hipotecarios en el estado subieron en una base anual de más del doble en último trimestre del año pasado, y la mayoría de los préstamos problemáticos correspondieron a dueños de casa que tienen menos de dos años con la propiedad, según reveló una firma de investigación de bienes raíces, de acuerdo con los datos proporcionados por DataQuik Information, una compañía con sede en San Diego.“La mayoría de los impagos ocurre uno o dos años después de que se hizo un préstamo y, por lo tanto, estamos en un período en el que el paquete de préstamos está en riesgo”, dijo Marshall Prentice, presidente de DataQuick.El tiempo promedio de los préstamos que cayeron en incumplimiento el pasado trimestre fue de 15 meses, dijo la firma.El número de notificaciones de impago que se enviaron en California entre octubre y diciembre representó un 145.3% más que los 15,196 que se enviaron en el último trimestre de 2005, según reveló DataQuik.

SACRAMENTO, CALIF — American workers had the lowest savings rate since 1933 last year. Working families had an abysmal rate of negative 1% in 2006 according to the U.S. Commerce Department.

This shocking figure follows a negative .4% in 2005. Not since the Great Depression of the 1930s have American consumers saved so little of their disposable income.

Disposable income is what is left of a person’s wages after taxes are taken out. Only four times in history have Americans had a negative savings rate: 1932, 1933, 2005, and 2006.

Savings rates were negative in the early 1930s because many Americans were forced to tap their savings to survive during the Depression. Today’s reasons for the negative savings rate have more to do with discretionary consumer spending and the need to spend more to pay a monthly mortgage bill.

“Home prices have ballooned in the past 5 years across the country, and the effects are felt most keenly in the densely populated areas on the East and West coasts,” observed Patrick McGilvray, J.D., President of http://www.TheHomeBuyingCenter.Com. “I have talked to many people in the past several years who spend over 50% of their net income to make their monthly housing payment after taxes are taken out of their paychecks. That figure is way too high in my opinion, but I understand that many people, especially first time homebuyers in California, felt that if they didn’t buy a home when they did they would not be able to afford one in the future.”

Speculators are blamed in part for the run-up in housing prices, and many amateur real estate investors who didn’t sell their homes quickly before the real estate market stalled are paying the price for their recklessness. Many of these newbie investors lied on their adjustable rate mortgage applications, and thought that they could survive negative cash flow on their properties by selling for a quick profit in a year or two. One website documents the travails of just such a rookie investor: http://flippersintrouble.blogspot.com.

Investors are not the only ones who have suffered. Homeowners who purchased homes with traditional, adjustable rate, and so-called negative amortization mortgages are spending a lot of their money to pay a mortgage that in many cases exceeds the value of their homes.