A New Wave of Foreclosures Homes Expected in Sacramento

The Sacramento area has been generally considered by real estate analysts as a potential model for housing market recovery. But according to foreclosure tracking service ForeclosureRadar.com, over 20,000 distressed homes in the area can become foreclosures homes in the next several months. These distressed homes can slow down expected market recovery.

In the counties of Sacramento, El Dorado, Placer, Yolo, Sutter and Yuba, many of the 4,449 houses foreclosed in recent months were not yet added to lists of foreclosures homes for sale. Additionally, there are 17,792 houses spread across the six counties which are in different stages of foreclosure and which can turn into foreclosures homes in the next several months.

In the middle of May, around 12,000 of the distressed properties were hit with notices of delinquency, which were issued by lenders after several months of non-payment of loans. Around 5,800 are being readied for auctions and those that will not be sold will be repossessed by the lenders as bank owned repo homes.

In Sacramento County, about two-thirds of home sales during the start of the summer home selling season were foreclosed homes. A percentage of the estimated 20,000 distressed homes would be added to these foreclosures homes for sale in the next months while the others would escape actual foreclosure through short sales or loan modifications.

California's newly launched three-month foreclosure moratorium is expected to save more houses from foreclosures.

Meanwhile, many analysts in the Sacramento area are citing out-of-state banks and other lenders as the ones in control over the pace of increase or decline in foreclosures in the area.

In the first months of 2009, the number of bank repos dropped because bank were not turning delinquent properties into repos for sale, according to ForeclosureRadar's chief executive officer Sean O'Toole. Either they were complying with foreclosure moratoriums, waiting for new federal policies or were delayed by other reasons.

When the number of bank owned foreclosures homes for sale declined, some realtors were saying the housing market is stabilizing.

But Lyon Real Estate chief Mike Lyon argued against the contention, saying that he is expecting a new wave of bank owned foreclosures homes in the next three months. Bob Bronswick, chief of Coldwell Banker's unit for Sacramento and Tahoe, said a new foreclosure wave in Sacramento may begin in June.

Meanwhile, the California Bankers Association denied the charge that they were delaying the addition of their distressed properties into their inventories of foreclosures homes because of the stress tests. Bankers argued that they were just complying with foreclosure moratoriums.

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