According to the Modesto Bee, in Stanislaus county underwater mortgages occur at twice the rate of the national average. The rate for San Joaquin county is even more extreme where 62.4% of mortgages are underwater compared to Stanislaus county’s 60%. The national average negative equity rate is 23% and the California state average is 33%. Areas high in negative equity have higher incidence of strategic defaults, short sales and foreclosures contributing to the slower market turn around.

The attached document provides a quick reference to assist distressed sellers in determining if a lender would have the right to collect on a deficiency resulting from foreclosure in the State of California.  It is intended only for reference.  I recommend strongly that a seller facing foreclosure or pursuing a short sale consult with an attorney and CPA.  Pat Holkesvig & Your Home Team specialize in:

Stockton Short Sales,

Lodi Short Sales,

Lathrop Short Sales,

Manteca Short Sales,

Elk Grove Short Sales,

Mountain House Short Sales,

Tracy Short Sales,

Ripon Short Sales and

Tracy Short Sales.

If you have any real estate related questions please contact Pat Holkesvig at (209) 471-6516 or complete our Contact Form.

Keep your eyes on the news August 17th when the Treasury will be holding a hearing regarding the future plans for Fannie Mae and Freddie Mac.  It is rumored that the Obama administration is about to order the government-controlled lenders to forgive a portion of the mortgage debt for Americans who are underwater.  If this were to happen, assumedly the short sale market would dry up and foreclosures would slow to a near stop. In theory, this would force the real estate market to regulate to a new normal. This could have a tremendous local impact considering the large percentage of short sales and foreclosures flooding the greater Stockton real estate market.

HR 5872, which passed the House of Representatives last week, increases FHA’s commitment authority for its multifamily insurance programs by $5 billion for the remainder of the fiscal year. While HR 5891, which passed the House of Representatives July 30, will permit FHA to increase its single family annual premiums, raising the statutory cap from 0.55 percent to 1.55 percent. Essentially, HR 5872 saved the ability for FHA to issue commitments for the remainder of the current fiscal year. Although HR5891 will cost more money to the single family consumer, it is believed this increase will perpetuate FHAs ability to become self sustaining and help to stabilize the housing market. At this time it is unclear what specific impact these changes will have on the Stockton real estate market and the number of future Stockton short sales.

According to a recent report on CNBC, Stockton’s luck may be changing. More properties that would have previously been lost to foreclosure are instead becoming short sales. According to the report, San Joaquin County foreclosures have fallen from 85 to 68 percent and defaults fell 43 percent in the second quarter of 2010.  However due to the tax breaks expiring, the number of perspective buyers has dwindled.  With an unemployment rate hovering around 25 percent, Stockton could take a long time to permanently recover

There are many homeowners who would like to sell but aren’t financially required to do so. Many of these people are waiting in the wings for the opportune moment to jump back into the housing market. In fact,  Zillow.com reported about 7% of homeowners surveyed said they were very likely to put their home on the market this year if they believed the housing market was improving. In addition to this already existing group, the number of homes with equity has grown this year, from 52% last year to 63% this May. This could pose a problem since many of these sellers will have unrealistic views about how much their homes are worth which in turn could influence the housing market.