Delinquencies and defaults more than doubled year over year, according to August figures released Tuesday by RealtyTrac, a marketer of foreclosed properties.
October is expected to be a peak month for hybrid adjustable rate mortgages (ARMs) to reset, with the interest rates on some $50 billion worth of loans poised to go up dramatically.
In the past few months, the foreclosure story has become a tale of two regions. Some of the hardest hit states have traditionally been in the Midwest, where plant closings and job losses have hit the economy there hard.
The other region is the Sun Belt, which is showing even more significant foreclosure growth as out-sized price increases in the first half of the decade led to virtually unchecked real estate speculation.
Nevada led all the other states in the rate of August foreclosure filings: one for every 165 households for a total of 6,197. Other hard-hit, sun-belt states were California (one in 224), Florida (one in 243), Georgia (one in 271), Arizona (one in 289), Colorado (one in 312) and Texas (one in 532).
Rust-belt states in the top 10 included Ohio (one in 281), Michigan (one in 288) and Indiana (one in 544).
California placed six cities among the top 10 metro areas for the number of filings. Modesto led the way with one of every 79 households. Stockton, Merced, Vallejo-Fairfield, Riverside-San Bernardino and Sacramento also hit the top 10. Detroit, Cleveland, Ft. Lauderdale and Las Vegas rounded out the list of worst hit metro areas.
California, by far the most populous state, also led the nation in the actual number of foreclosures. Some 57,975 households were in some stage of default during the month. Florida was next with 33,932 and Ohio, with 17,793, was third.
Saccacio also pointed out that many more of the delinquent homes are winding up back in the hands of the lenders under the designation REO (real estate owned) properties.
When borrowers can't catch up on their mortgages, their homes are often sold before the actual foreclosure takes place. Even if they go on to the next step in the process - auction - they may not draw higher enough bids for lenders to accept the sales. In that event, they return to the banks as REO properties.
When housing markets were hot, many delinquent borrowers escaped actual foreclosure because their home equity had grown enough so that it well exceeded the amount of the loan's debt. That enabled them to sell their properties at a profit or refinance and use the money to pay off past loans.
Because of the housing slump, far fewer homeowners are in that position today. Indeed, many are underwater, owing more on their mortgages than the homes are worth. All told, fewer borrowers have the resources they need to work out their debts without being foreclosed on.
Silicon Valley venture capitalists are looking far beyond their backyards for hot new dot-com startups according to figures from data provider Dow Jones VentureOne, a unit of the publishing company Dow Jones (DJ) that is being acquired by News Corp. (NWS), and accounting firm Ernst & Young.
According to a report released Monday, venture capitalists invested $464.2 million in 101 so-called Web 2.o companies during the first half of 2007, a 7 percent increase from the same period a year ago and new record high. But less than 20 percent of this cash was invested in Bay Area firms.
“Investors are looking to diversify their Web 2.0 portfolios so they are looking at new regions,” said Valerie Foo, research manager at Dow Jones VentureOne.
So what’s hotter than the Valley? New England. This shouldn’t come as a huge surprise since the Boston area, with all its colleges and universities, has always been a training ground for engineering talent.
While there were many more deals involving Bay Area companies in the first half of the year– only 10 New England Web 2.0 firms received a round of financing compared to 25 in the Bay Area — the New England firms received $102 million to the Bay Area’s $91 million. The big reason for New England’s surge to the top of the VC money list was due to a $30 million investment in Cambridge, Mass.-based enterprise software developer n2N Commerce.
But the Bay Area and New England weren’t the only hot spots in the U.S. The Pacific Northwest saw a prominent deal in the first half of 2007 with VCs investing $25 million in Corvalis, Ore.-based MyStrands, a social recommendation service focusing on music and other forms of media. That comes on the heels of a $25 million in Seattle-based real estate estimate Web site Zillow in July 2006.
Southern California was a VC hotbed as well, attracting $59.2 million in VC investments, led by a $25 million round in April for Los Angeles-based Reunion.com, a social networking site that competes with United Online’s (UNTD) Classmates.com, which recently filed to go public.
VCs also spread their wealth around the globe, with $107.3 million invested in firms based outside of the U.S. Some of the more prominent international firms receiving money were Belgium’s Netlog, a social networking site which landed an $8.4 million round in April, and Yedda, an Israeli-based social question and answer site that raised $2.5 million in March.
You may be noticing a trend here. VCs are very interested in social networking companies. But despite this, there haven’t been too many social networking IPOs as of yet. And only a handful of these firms have been acquired by larger companies, most notably MySpace parent company Intermix Media by News Corp. in 2005 and YouTube by Google (GOOG) last year.
And Foo doesn’t expect a wave of IPOs or acquisitions in the near-term either.
“We’re not seeing many exits for the backers of Web 2.0 companies yet. Investors hope they will go public or sell out to larger firms and you would think would have a shot but the public markets are looking for consistent revenue and profit growth and that will require a lot of time. I’m also not too surprised that there aren’t many acquisitions because a lot of these companies are in their early stages,” Foo said.
Nonetheless, Foo did not think there was a social networking bubble per se. Instead, she said that there are “healthy investments in a small but emerging sector.”
That said, it looks like big VCs such as Sequoia Capital and Draper Fisher Jurvetson, which were the most active investors in this area during the first half of 2007, are going to have to be patient. It might be a while before they can cash in on all these start-ups they’re throwing money at.
Easy Street Interactive
| Authorized A La Mode Reseller | Training | Web Design | SEO |
Phone: 603-682-3625 |
A La Mode Website Design Options | Contacts | Website Maintenance | Home | My Blog
Copyright © 2010 Easy Street InteractivePortions Copyright © 2010 a la mode, inc.Another XSite by a la mode, inc. | Admin Login| Terms of Use| Site MapAll rate, payment, and area information are estimates and approximations only.
