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Posted on 09/29/2003 7:37:38 AM PDT by Brian S
SACRAMENTO, Calif.--(BUSINESS WIRE)--Sept. 29, 2003--Foreclosure property investment advisory firm Foreclosures.com is predicting an increase in California mortgage defaults as the state struggles with political uncertainty and a record $38 billion deficit.
"Foreclosures fell sharply in southern California in the second quarter," said company president Alexis McGee. "We expected that as the last victims of the 2001 recession were washed out of the system. Now activity is edging up again. Our moving average for Los Angeles shows an increase in all foreclosure activity from 111 weekly filings in mid September to 117 at month's end."
Foreclosures.com has been tracking foreclosures and assisting investors on their website www.foreclosures.com for more than a decade in eighteen California counties. The firm has expanded their service to include the metro areas of Phoenix AZ, Chicago, New York City and all of New Jersey.
Ms McGee went on to say that uncertainty about the financial atmosphere and possible changes in the state's political infrastructure will cause a further rebound in defaults as recovery slows and more homeowners find themselves in financial distress.
Ms. McGee pointed to the permanent elimination of 16,000 government jobs mandated in the budget signed by Governor Davis at the beginning of August as an aggravating factor. "Most of those people are homeowners, and they will find transition to the private sector difficult," she said.
She added that the current turmoil further obscured an already cloudy employment picture throughout the state. "Statewide, unemployment is above the national average at 6.6% and in Los Angeles, it stands at 7%. San Jose is at 8.4%," said Ms McGee. "While the economy is poised for recovery, we expect uncertainty about the future tax climate and structural changes in government to delay business expansion plans and startups that could otherwise jump start a recovery in the tech sector."
Foreclosure activity, said Ms. McGee, was essentially flat in the thirteen northern California counties her company tracks. "We saw a slight drop in all types of filings to 2500 in August from 2730 in July," she said, "but this could increase in the fourth quarter as job losses grow, and the tech sector recovery stalls."
She added that to have a sound economy, California needs a sound political infrastructure "but we don't know what form that infrastructure will take."
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