Just like any city in the United States right now, Los Angeles is trying to deal with the issue of the growing number of bank foreclosures on homes. A report from the DataQuick Information Systems revealed that Los Angeles bank foreclosures have increased by 33.5% as of June 30, 2008 as compared to last year. DataQuick also stated that the number of defaults made this year is down by 6%, unlike last year when it was up by 39%.
No one believes, however, that the decline in the number of defaults made this year as announced by the DataQuick report reflects a positive development in California's real estate sector. If anything, authorities and experts are guessing that lenders are far too busy dealing with overflowing paperwork on bank foreclosures to give a figure that actually represents the current scenario with regards to Los Angeles bank foreclosures. After all, it is clear that Los Angeles bank foreclosures are still on the rise despite the number of defaults going down.
This continuous rise in bank foreclosures in California, not just in Los Angeles, is a totally losing situation for everyone involved, on a level that goes far beyond having more and more people losing their homes because of bank foreclosures. Ideally, the situation concerning Los Angeles bank foreclosures is good for first-time homeowners who are looking for a great deal in buying a home. But because of the air of uncertainty prevailing in the real estate sector of the United States, many people have become too nervous to take out loans to buy even discounted bank foreclosures.
To respond to this alarming concern regarding Los Angeles bank foreclosures as well as foreclosures occurring in other cities in California, the Californian Senate passed a bill on the first week of July that is aimed at slowing down the momentum on foreclosures that the problem has been gaining in the last few years. It also targets the protection of homeowners from possible foreclosure as well as encourages buying homes that are already foreclosed. The bill is none other than SB1137, otherwise known as the Perata bill.
The Perata bill basically implements three measures. The first measure is that lenders are supposed to give more warnings to their borrowers in the event that their home is about to enter a default. Aside from giving more warnings, these warnings should be given much earlier so that borrowers may have ample time to pay out what they owe to the lender. In case it is not possible for the borrower to become updated in his payments to the lender, the extra time would give the borrower more room to be able to sell his home.
The second measure that the Perata bill seeks to pursue is to have landowners notify the people renting or leasing their property of the impending default a lot earlier. This is to give these renters more time to find a new place to move to in case the property does go into default and eventually enter bank foreclosure.
The third measure is to require lenders to continue the upkeep and maintenance of the properties they have foreclosed so as to maintain the value of the other properties in the neighborhood as well as to encourage buyers to purchase them.
The number of Los Angeles bank foreclosures has started to decline. According to data released by auctioneer and tracker PropertyShark.com, the volume of foreclosed homes in the county fell more than 51% in October 2008 to about 2,400, from 4,900 in September. The decline was the greatest and most notable in about two years.
Market observers note that the volume of Los Angeles bank foreclosures has started dropping when California implemented a state legislation aimed at controlling the robustly rising foreclosure rates in the state. Initial terms of a new state law against foreclosures were implemented on September 8, after being passed on July 8. What analysts note and warn about is that there are still several sections of the legislation that are not yet rolled out and enforced. It is expected that the number of Los Angeles bank foreclosures will further fall when the full law is implemented.
During the entire stretch of the housing industry downturn in the US, the Los Angeles County has been among the US metropolitan areas where home prices declined and foreclosures surged. In normal setup, the housing sector in an area will stall, but in the case of Los Angeles, just like other counties in other states, foreclosures kept the market active. Lower price tags prompted more homebuyers and investors to rush and snap up Los Angeles bank foreclosures at great discounts, usually about 20% to 50% off actual market values.
As the number of foreclosed homes in Los Angeles drops, what will happen to the opportunities for homebuyers? In the coming months, the effect of the decline will be felt. But for now, buyers still could enjoy the great inventory of available Los Angeles foreclosed homes.
Both Clint Jhonson & Joseph Smith are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
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