Hale Razor

Foreclosures to jump, especially in Southern California

Foreclosures are looking to increase, particularly in California:

ARMs are now starting to fall by the wayside as the difference in interest rates narrows. The average rate on a 30-year fixed rate loan in May was 6.60 percent compared to 5.63 percent on a one-year ARM, according to Freddie Mac. In 2003, rates on a 30-year fixed were at 6.54 percent, while ARMs carried a 3.76 percent rate.

This year, more than $300 billion worth of hybrid ARMs will readjust for the first time. That number will jump to approximately $1 trillion in 2007, according to the MBA. Monthly payments will leap too, many beyond what homeowners can afford.

and

"ARMs are a ticking time bomb," said Brad Geisen, president and chief executive of property tracker Foreclosure.com. "Through 2006 and 2007, I'm pretty sure we'll see a high volume of foreclosures."

and

California, where the median home price reached $468,000 in April, leads the nation in the percentage of homes purchased with adjustable rate mortgages. Nationwide, ARMs account for 24 percent of all home loans.

A bankruptcy could help out if the foreclosure problem materializes, particularly in Los Angeles.

Medical bills cause bankruptcy

According to a recent study, nearly half of all bankruptcy cases involve steep medical bills.  I'm sure someone will try to spin this BK news into why we need universal health care or to fit some other agenda.   

Seems to me that this is why the bankruptcy laws exist:  people have bad things happen to them in life, they don't plan for them, and need help starting over.

Credit tips

Credit Score Info

Good tips for improving your credit score, how to learn about it, and what it all means in today's L.A. Daily News.  You can get one credit report each year from here.  Of course, if it's just too far gone, you can always file bankruptcy.  It's not the end of the world to get a fresh start.