Foreclosures rose in the West, and the outlook isn't good, according to a foreclosure listing service.
Foreclosure activity in the first quarter increased significantly from the prior quarter in several western and southwestern housing markets, according to an announcement today from ForeclosureS.com, a real estate investment advisory firm and publisher of foreclosure property listings.
"The biggest increases were in major urban centers around the West," ForeclosureS.com President Alexis McGee said in the announcement.
McGee cited the examples of Los Angeles County, where recorded pre-foreclosure filings and foreclosures jumped about 29 percent from the prior quarter to 6,314, and San Diego, where the numbers soared 43 percent to 2,241.
The executive pointed out there widespread concern over the number of issued interest-only and high negative-amortization loans in recent years to qualify borrowers for more expensive homes during the coastal markets' price boom of the last half decade.
"In San Diego for example, more than half of home purchases in 2004 and 2005 were financed with these exotic mortgage products," McGee added. "When these loans reset to true market rates the payment shock can be severe and put many households in financial distress."
The "increases were coincident with cooling markets in previously overheated areas, and with the steady rise in interest rates," she reportedly said and predicted that "rampant speculation in some markets, along with a slowdown in price appreciation would lead to an increase in delinquencies and foreclosures,"
"In Las Vegas, this appears to be already happening," with foreclosure activity more than doubling to 3,246 from the fourth quarter's level of 1,480, McGee added. "Speculators who came late to the party are being washed out of the market."