Realty Trac: California foreclosures up 254%

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Good morning. More foreclosure news this morning, this from Reuters: ‘Residential foreclosure filings nearly doubled last quarter from a year earlier, and appear set to increase into 2008, a report said on Thursday.’

The report is from Realty Trac. Here are some California numbers for the third quarter:
--Total foreclosure filings: 148,147, an increase of 36% from the second quarter, and 297% from year-ago numbers.
--Total number of properties with filings: 94,772, an increase of 39.3% from the second quarter and 254% from year-ago numbers.

For purposes of comparison, the third-quarter California numbers from DataQuick:
--72,571 Notices of Default, an increase of 34.% from the second quarter and 166.6% from year-ago numbers.

We’ll see if Realty Trac has a breakdown on Notice of Default numbers only, so we can compare apples to apples. Check back later today for that update.

Our take: There’s no hint we’re near a peak in foreclosures, and a cursory look at recent underwriting history tells you we shouldn’t be. The filings we’ve already seen reflect badly underwritten sub-prime loans from 2005 and 2006, some of which went bad before the teaser rates even expired. There are more doomed sub-prime loans that have not gone bad yet -- we haven’t gotten into the worst underwriting yet, which was late 2006 and early 2007. Add to that Option ARMs, which will likely fail in pretty big numbers.

Your thoughts? Insights? E-mail story tips to lalandblog@yahoo.com.