The end result of the subprime lending mess is that home foreclosures have spiked dramatically in the Bay Area – and this situation threatens to continue. According to NBC11.com, there were 258 foreclosures during the second quarter of 2006 as compared to 2,206 foreclosures in the second quarter of 2007. This represents a whopping 755% increase, and an 11 year high.
In addition to the rising interest rates and slowing home sales, Federal raids of mortgage brokers suspected of preparing fraudelent loans has also had an impact on foreclosure rates. It is harder now to sell a home when in trouble, and there are fewer mortgage brokers able to help homeowners refinance.
There are now many homes in foreclosure for investors to choose from, but there are also many new renters in the valley – not a good sign for county and city tax revenue bases, or for our schools.