Did anyone catch the graphic below in the OC Register on Sunday? What a visual. The map was a part of an article stating that “Foreclosures spike unevenly in O.C.” and that “Homeowners struggle in central cities but coast on the Coast.” While it’s kind of like, “no duh!” (how can you compare Newport Beach to Santa Ana?), it’s great to see it on a map. Most of the red (and red means bad) pictured below is Santa Ana. Check it out…
According to Matthew Padilla’s article in the Register, “Santa Ana tops the list of foreclosure concentrations with two ZIP codes – 92707 and 92701. Both have more than 10 foreclosures per 1,000 homes.” From my count, only two of the Santa Ana zip codes listed on the map are not in red (or 6 or more foreclosures to 1,000 homes). The two zip codes that are not red are still close with 3.00 – 5.99 foreclosures per 1,000 homes, and one of these zip codes (92705) is really North Tustin.
Why Santa Ana? Well, Santa Ana has been seeing a tremendous overall price decline (“Last month’s median price of $219,000 in 92701 was the lowest in the county and down 37 percent in a year,” per Padilla). Also, bad lending practices a few years ago has fueled the housing crisis in Santa Ana today. Those that qualified for big loans five years ago now do not and have a ballooned mortgage payment to boot. Short sales and foreclosures (stemming from sub-prime lending practices) that have been happening here and there all over the County have been more concentrated in Santa Ana. Just take a look at the Redfin map, seems like nearly every house for sale (and there are a lot!) is a short sale. According to Padilla:
Connie Der Torossian, a vice president with the Santa Ana-based nonprofit Fair Housing Council of Orange County, said while her group seeks to assist struggling homeowners from across all of the county, more than half come from Santa Ana.
She said owners generally failed to understand how much their loan payments would increase. Government data shows that in 2005, the peak of the housing boom, 75 percent of the loans in a census track overlying with ZIP 92701 were high cost subprime loans.
“Most got a loan from a friend, their friend the mortgage broker,” Der Torossian said. “There was a sense of trust.”
Der Torossian said she often tries to help owners by getting the lender to agree to reduce payments, but the process, if successful at all, takes three to five months.
For example, one of her current Santa Ana clients earns $2,000 a month and has a mortgage of $520,000, more than twice what she can afford. In that case, the lender would agree to reduce the mortgage to $338,000 – the home’s current value – if the owner can get a refinance via a government program dubbed FHASecure.