Sean O'Toole, founder of ForeclosureRadar, a Web site that tracks foreclosures
"We're still seeing the number of notices of (mortgage) default going up, so for at least the next four to six months, we're going to see the foreclosures rise," O'Toole predicted.
He said most lenders wait until mortgage payments are at least 60 days late before they file notices of default. They can't foreclose on property until at least 120 days after that, but it often takes longer.
If a delinquent homeowner files for bankruptcy, a foreclosure can be delayed. O'Toole said he has seen some homeowners delay the process by more than two years.
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Raphael Bostic, assistant director of the University of Southern California Lusk Center for Real Estate
Bostic said those at risk of foreclosure fall into three types: speculators, those who made bad decisions and those who were duped.
Speculators who bought houses with plans to quickly resell for big profits don't get any sympathy from Bostic. He said they made a strategic guess about how the housing market would appreciate, and they should pay for losing their bet.
Most of those in jeopardy of foreclosure, however, bought houses to live in and had at least a vague understanding of the loan they were agreeing to, according to Bostic.
"But they made bad decisions," he said, "and we don't generally bail out people who make bad decisions."
Some borrowers, however, were duped into agreeing to loans they couldn't afford. Bostic said many of them were lied to about loan details or otherwise deceived: "I have total empathy for those people, but there's not an easy way to distinguish who they are."
78-year-old Ripon widower, possible fraud victim
One Ripon resident is convinced he was defrauded. The 78-year-old had lived in his modest home for 20 years before receiving an attractive refinancing offer in the mail from a Southern California mortgage broker.
"My wife had died, and I was a little bit pinched for funds," recalled the man, who asked not to be identified. After talking to the mortgage broker by phone and hearing about what sounded like a great deal, "I sent him copies of my monthly income statements and he filled in the loan application for me."
The Ripon man said someone delivered the completed 85-page document to him, waited for him to sign in all the designated spots, then left with the paperwork.
The loan came through, and the monthly payments started off low, as expected. But in less than one year, the interest rate soared and his payments more than doubled.
"I went back and read what I had signed, and I thought, 'How stupid could I be?' " the man said. The loan application he signed claimed he earns nearly $7,600 a month, but his real income is only about $4,100. The man said his mortgage broker "inflated my income when he filled out the application for me."
Worse yet, the adjustable mortgage started off with a negative-amortization teaser rate, so now the widower owes more than he originally borrowed and more than his home is worth. He's trying to refinance before he defaults, but he fears he's headed to foreclosure. Patricia Platt, president of the San Joaquin Valley Escrow Association
Borrowers rarely take the time to carefully read all their paperwork before signing mortgage and home purchase contracts, Platt said.
During her 17 years in title insurance offices, Platt said she's seen only a couple of clients sit and read document details. As a title officer, she said she points out key loan provisions -- such as interest rates, prepayment penalties and broker fees -- but she can't give advice.
"We're a neutral third party. We can't tell them if it's a good or bad thing," Platt said. "We all have to be responsible for ourselves. When making a business decision as important as refinancing or buying a house, they should do their research and read their paperwork."
Marlene Champlin, a Modesto renter and small business owner
Champlin bought her first home in 1982, and she sold her most recent house in 2004. Now she rents.
"It's not a sin to rent, but somehow in our country we have decided it is," Champlin said. She estimates that her $869 monthly rent is less than half what she used to pay to own a home, and she has better uses for her money.
"I'm a business owner who took a bunch of risks that didn't pay off, and I'm getting out of debt now," Champlin said. She could have tapped her former home's equity by refinancing, but she's glad she decided to sell instead. "If you have to compromise basic common sense to own a house, it's probably not a good thing." Dean Wehrli, vice president of the San Diego-based Sullivan Group Real Estate Advisors, which does feasibility studies for developers and landowners
Long term, Stanislaus, San Joaquin and Merced counties will be an economically good place to own a home, Wehrli said.
"The Central Valley is supposed to be the depository of millions of people (in coming years), so where are they going to live?" said Wehrli, who is in charge of the company's Northern California region. As new residents move to the region, he said, they'll consume the current excess of supply and the housing market will turn around. "But there's absolutely no way 2008 is going to be anything better than a status quo year. Maybe 2009 will."
Real estate investors shouldn't expect to make big bucks any time soon. Wehrli said the "flip-this-house nonsense" and "treating your home's equity like a piggy bank" needs to stop.
"We've got to get away from all these buyers thinking, 'I'm going to make money from my house,' " Wehrli said. He suggested people return to making real estate decisions based on traditional reasons, such as finding the neighborhood they want to live in and the best school district for their children.
Rodney Zwahlen, a Modestan who's considered buying his first home
"The research I've done indicates it's ludicrous for people to even buy in Modesto," said Zwahlen, 30, noting how he can rent a home for about half the monthly cost of buying it.
He and his fiancée plan to rent a recently refurbished two-bedroom Modesto condo for about $1,000 a month.
Based on what most people in Modesto earn, Zwahlen thinks "median home prices should bottom out at $200,000 to $250,000." He plans to continue "sitting back watching the prices drop."
Christy Quaresma, marketing manager for Fitzpatrick Homes, which is building Summerfield in Turlock
"You have a lot of people right now who are fence-sitters," Quaresma said about potential buyers. "Markets change, and people are scared."
To calm those fears, Summerfield guarantees buyers that "if our base price lowers before you close escrow, we will adjust your price," Quaresma said.
That's helped convince about 15 people to buy homes there since the development opened in June. Prices start at about $299,000.
Christopher Weed, a director of the San Joaquin Chapter of the California Society of Certified Public Accountants
"You make money when you buy, not when you sell," said Weed, repeating a real estate adage about investing in property when the market is bad. "The best time to buy is when no one else is. Being a contrarian is not bad when it comes to investment."
But Weed believes the best time to buy is yet to come.
"Wait for the banks to get hungry. Then they'll be willing to deal," said Weed, noting how many homes lenders have repossessed from borrowers. "Six months down the road -- if you've got cash -- there's going to be some good buys out there."
-- J.N. Sbranti