California distressed homeowners, particularly in Northern San Joaquin Valley, were assured by U.S. Housing and Urban Development (HUD) Secretary Shaun Donovan that changes would be made to ensure that more residents would be eligible to loan modifications that will help them avoid turning their homes into REO property.
The change is expected to help more troubled homeowners qualify for the loan modification program. However, the program is not guaranteed to help troubled homeowners who bought their properties at the height of the housing market boom.
Donovan visited Merced County upon the request of Representative Dennis Cardoza who wants to focus national attention on the growing number of REO property in the valley.
Merced, San Joaquin and Stanislaus are among the top counties in terms of high foreclosure rate nationwide.
According to industry experts, many valley residents were enticed to take out subprime, adjustable-rate mortgages and other loans that initially have extremely low interest rate. Prices on these markets surged beyond the reach of many residents.
The collapse of the housing market started in 2005 which left many homeowners with mortgage payments that reset to higher rates, with no refinancing options because the value of properties dropped so low that they are worth far less than their original price.
The housing market collapse resulted in REO property crisis. In counties of Merced, Stanislaus and San Joaquin, the number of foreclosed homes reached 40,000 since January 2007. So far, the crisis has resulted to almost $16 billion unpaid mortgages.
Meanwhile, Cardoza described the damage brought by foreclosures in the area as similar to the devastation created by Hurricane Katrina. He and Donovan walked along neighborhoods hardest hit by foreclosures. They saw a foreclosed house originally priced at $340,000 in 2006 but is now listed for sale at $83,500.
On the other hand, Donovan lauded the economic stimulus program of the Obama Administration, which included foreclosure aid funds for local governments amounting to $2 billion.
On a positive note, the housing market in the area showed some signs of improvement with home values and sales inching up in May.
However, housing experts are expecting a second wave of REO property crisis as foreclosure moratoriums start to expire. Still, Merced County Councilwoman Michele Gabriault-Acosta believes that an expanded loan modification program may mean a big help to the market languishing over the effects of foreclosure.
Start your Search for:
- Lathrop Foreclosed Properties
- Atwater Foreclosed Properties
- Merced Foreclosed Properties
- Modesto Foreclosed Properties
- Ceres Foreclosed Properties
Or search Foreclosed Properties by State.
