Boomer’s Blog

The trend heading into the holidays seems to be one of growing unemployment and a rising tide of homeowners drowning in mortgage debt.

An Ironic wist on a Familiar Story
The U.S. Bureau of Labor Statistics’ October report finds that unemployment last month soared to a 14-year high of 6.5 percent, as 240,000 jobs were slashed. Yet the Orange County Register’s Mortgage Insider, Matthew Padilla has made an interesting observation. He sifted through the data to report that in September,  352,200 workers were making a living in the mortgage business — that’s up from 349,300 in August.

Negative Equity Plagues Homeowners
But the recent real estate statistics that really capture the real estate investor’s eye come from According to First American CoreLogic, 2.1 million mortgages are within 5 percentage points of being in a negative-equity position and 7.5 million mortgaged properties are carrying more mortgage debt than they’re worth. That means that nearly 20 percent of properties with mortgages are beneath the powerful waves the economic undertow.

Rising Percentage of Underwater Mortgages in the States
See how the mortgages currently in negative equity break down among the states listed below (Note: percentages have been rounded off and the states are listed in descending order starting with the highest reported rate of negative equity.):

1. Nevada: 48%
2. Michigan: 39%
3. Arizona: 29%
4. Florida: 29%
5. California:  27%
6. Georgia: 23%
7. Ohio: 22%
8. Colorado: 18%
9. Arkansas: 16%
10. New Hampshire: 17%
11. Texas: 17%
12. Virginia: 16%
13. Tennessee: 15%
14. Kansas: 15%
15. Iowa: 15%
16. Alaska: 14%
17. Wisconsin: 14%
18. Nebraska: 13%
19. Kentucky: 13%
20. Missouri: 13%
21. Minnesota: 12%
22. Maryland: 12%
23. Rhode Island: 12%
24. Louisiana: 11%
25. Idaho: 11%
26. Utah: 11%
27. Oklahoma: 10%
28. South Carolina: 10%
29. Indiana: 10%
30. North Carolina: 10%
31. Illinois: 10%
32. Delaware: 10%
33. Washington D.C.: 10%
34. Massachusetts: 10%
35. New Jersey: 9%
36. New Mexico: 8%
37. Washington: 8 %
38. Oregon: 8%
39. Alabama: 7%
40. Connecticut: 7%
41. Montana: 7%
42. Pennsylvania: 6%
43. Hawaii:  6%
44. New York:  4%

Source: First American CoreLogic

Notes: Data were unavailable for Maine, Mississippi, North Dakota, South Dakota, Vermont, West Virginia and Wyoming. These data are based on 42 million properties that had a first or second mortgage, accounting for at least  80 percent of U.S. mortgages.

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California foreclosures and the mortgage meltdown have been making international news headlines for some time. But this month, news  from the Golden State went from bad, to the Twilight Zone.

Much like the classic TV show, first made popular in the 1950s due in large part to host Rod Serling’s melodramatic gravitas, California’s housing market begs for a prelude to prepare readers for the truly bizarre. As Serling said: “There is a fifth dimension beyond that which is known to man,” He might as well been introducing late-breaking developments in California’s foreclosure crisis.

Here are the five most most startling, weird and ugly foreclosure stories to come out of California so far this month.

1. California REO Foreclosures Selling like Ipods
   This month, the LA Times reported that in April, California home auctions sold nearly 23,000 foreclosure properties at courthouses throughout the state. That’s is a 44 percent jump from the number of REO auctions reported for the state in March. That’s 1,000 homes sold at auction each business day for an entire month.
2. IRS Tax Delinquency, Lies and the Lawmaker
   Although she denied it earlier this week in a written statement, public records show that California Congresswoman Laura Richardson’s Sacramento house was sold via foreclosure auction on May 7. When she bought the 1,600 square-foot home in 2007, she paid more than $535,000. By the time it sold at auction, she owed $600,000 in unpaid loans and fees, including nearly $9,000 in property taxes, reports Capitol Weekly.
3. Countrywide Exec’s Email Debacle
   When an e-mail sent by a distressed homeowner inadvertently landed in his in box, Countrywide Financial Chairman Angelo Mozilo mistook the “reply” button for the “forward” button and sent his caustic response directly to the sender. The LA Times reports that not only was he unsympathetic in his response, he characterized the online foreclosure counseling service that encouraged the homeowner to contact his lender as “unbelievable” and “disgusting.” Mozilo has been under fire for cashing out while Countrywide, and the rest of the mortgage industry was tanking. In 2006, Mozilo was paid nearly $50 million in compensation; between 2006 and 2007, he cashed in stock options then valued at $140 million.
4. Never Neverland Again?
   Mid-month, entertainer Michael Jackson averted the scheduled foreclosure sale of his 2,700 acre Encino Neverland Ranch when his $23.5 million loan was purchased by real estate investment giant Colony Capital, according to Reuters.com.
5. REO Lender Takes the Bat to Canseco’s Portfolio
   At the beginning of this month, news got out that baseball great Jose Canseco let his 7,300 square-foot Encino home slide into foreclosure. He bought it in 2005 for $2.8 million, and when foreclosure struck, the property already had an IRS lien from a judgement levied against Canseco for starting a fight that leveled a Miami night club several years ago. This week, the Chicago Tribune reported that Canseco, who blames his two divorces for his financial woes, intends to generate wealth in his new career as a celebrity boxer.