So which group of economists is correct, are foreclosures truly decreasing or are they going to be increasing? Depends on the data, I say. As a San Jose Short Sale agent, what concerns me are the two items mentioned in the article. First, I think everyone will agree that unemployment will be a driving force behind foreclosures in California. Unless we can find jobs for California’s 12% unemployed, even with loan modifications, it’s just a matter of time before these folks will face foreclosure. The mortgage modifications for most people will simply delay the inevitable by a few more months, unfortunately.
Secondly, there is the issue of the wave of re-setting adjustable mortgages which are scheduled for the next couple of years, chief among them the deadly Option ARMs. Once these start to re-set (and California has the most Options ARMs of all other states), in conjunction with high unemployment rates, we are going to see some serious carnage. I hate to sound so pessimistic, but those are the fact that I see driving foreclosure activity in the coming few years.
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