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Rick Sharga, RealtyTrac’s Senior Vice President, and frequent network talk-show expert on housing, presented to a packed room of Prudential California Realty’s Orange County agents on Tuesday, November 11, 2009. RealtyTrac provides the largest database of foreclosure information in the country, covering 2,200 counties and 92%-94% of all U.S. households.

Following are some excerpts from his speech:
- The first wave (a tsunami) of foreclosures hit in 2005 through 2008. These were directly attributed to the sub-prime market on loans given to people who could not afford the property;
- The second wave, what we are currently experiencing, is more the result of the economic downturn and job losses;
- RealtyTrac estimates that 45% of home sales in the recent past have been of distressed properties (either bank-owned or in some state of foreclosure);
- We are currently in the 45th straight month of increased foreclosure activity. The trend is not expected to subside until sometime in late 2011;
- California’s foreclosures spiked in 2007 and continued into 2008;
- California is responsible or roughly 523,000 of 2.3 million forecloures nationwide, or 23%;
- RealtyTrac forecasts that there will be one foreclosure for every six to 10 jobs lost;
- Anywhere from $60 billion to $100 billion of Alt-A and Option ARM loans are about to be recast, raising payments for homes that have these loans. This will generate the next huge wave of foreclosures;
- 60% of all foreclosures are in six states: California, Florida, Nevada, Arizona, Utah and Colorado;
- 10% of all mortgages today are delinquent, 4% are in the foreclosure process;
- Banks have slowed down the foreclosure process, not strategically, but because of the increased volume, workload and requirements imposed by the government’s “Making Homes Affordable” program;
- The “Shadow Inventory” many people refer to exists through the elongated process of foreclosing and in the pending foreclosures on delinquent mortgages:

Here are some forecasts being made by RealtyTrac:
- Foreclosures will peak in 2010. If so, this may prevent another massive crash;
- Unemployment will be the primary driver in foreclosure activity;
- Option ARMs resetting in Q2-Q3 2010 will set off another wave of defaults;
- “Strategic Defaults,” people who

can pay

, but don’t because they have negative equity in their home, will increase;
- Loan modifcations will be ineffective;
- Most likely scenario is a long, slow, flat recovery over the next three to four years;
- “Normal” markets will not return until late 2012 (although he pointed out that some economists consider him to be a “raging optimist”).

We were very grateful to have Mr. Sharga address our group and obtained a lot of useful information from his presentation. We encourage folks who are interested in knowing more about what is going on in the foreclosure space to subscribe to RealtyTrac at www.realtytrac.com.