Examining California’s effort to keep the rate of California foreclosures down invariably means that one needs to examine how foreclosures went up over the last two to three years, much of which can be chalked up to rampant speculation. Additionally, California has been suffering from a number of structural defects in terms of its real estate markets for quite a while as well.
To begin with, it’s pretty much been an accepted fact that California real estate is always pricier than the real estate in most other parts of the country with several notable exceptions (Honolulu, Hawaii and certain parts of New York City and Boston, Massachusetts market to name a few). Whether this high prices were really sustainable forever, is now being shown to be a falsehood.
Unfortunately, a great many speculators and buyers of real estate in California thought just such a thing, never mind that every economic boom is eventually followed by an economic contraction, correction or bust. This one, when it finally came (and it took quite a while) was particularly severe and more vigorous than is normally the case.
California also had a few structural defects in its real estate market that made it attractive in one way but that same attractiveness also was thought to be a detriment to the state and its ability to generate revenues in several other ways. In 1978, the people of the state pushed through a change to the California Constitution that limited property tax increases to certain predefined levels.
For those on the buying and of the real estate market, this initiative — known as Proposition 13 — helped to make real estate out in California artificially attractive for quite a long time. With reasonable property tax rates (at least for California), many more buyers than would normally be expected got into the market in a big way. Of course, the recession caused the bottom to drop out.
Now, the Golden State is trying to dig out of a hole created in part by a steep rate of increase in CA foreclosures that it might not have had to deal with if it were not for these sorts of structural defects. In 2009, the Golden State enacted into law the “California Foreclosure Prevention Act” as a way to help slow down the rate of residential foreclosures.
This is mainly done through what the state calls a 90 day “holding” period, which is added on to the normal time line that most standard foreclosures must adhere to. It is requiring that lenders wait an extra 90 days after they’ve sent a notice of default to be recorded before they can move to record and publish a Notice of Trustee’s Sale. There are certain criteria that must be met, by the way.
And while CA foreclosures are still markedly up from a decade or so ago, it does actually show some signs of improvement though others would say it’s showing signs of an increase in the near future. What counts right now, though is that California is trying to apply a dressing to the wound it suffered before it begins to take concerted action to stabilize the rate. Many people are hoping it succeeds.
Understanding efforts to prevent CA foreclosures from increasing drastically means, understanding how the foreclosure rate out in California increased so much over the last few of years. We’ve got the ultimate inside scoop on ca foreclosure properties.
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