Life in the Valley Economy 2010 - Working Partnerships USA

Seeking Security: Indicator 1: Savings and Debt
Foreclosure rate in Santa Clara County breaks
all records—year after year after year
For the third year in a row, a record number of
Santa Clara County homeowners received notices
of default on their mortgages (the first step in the
foreclosure process). In 2009, lenders sent 15,118
notices, an increase of 26.8% over the previous recordsetting
11,922 default notices in 2008. By comparison,
the number of default notices sent in 2002 (also a
recession year) was 2,960.
The foreclosure crisis is a nationwide phenomenon
which has hit Santa Clara County severely due to the
region’s extremely expensive housing market. From
2006 to 2009, foreclosure activity increased by 208%
statewide; in Santa Clara County, it increased by 481%. 5
The foreclosure crisis has resulted from a confluence
of factors: subprime loans, adjustable rates, 100%
financing, and other “exotic” loans made without
adequate oversight; subpar wages that blocked many
Americans from affording a home using conventional
loans and pushed them to rely heavily on excessive
credit (encouraged to do so by banks, brokers and
lenders); the housing bubble, which artificially inflated
home prices and then collapsed, leaving thousands
of Silicon Valley homeowners underwater on their
mortgages; and double-digit unemployment which has
caused homeowners to fall behind on their mortgage
payments when they lose their jobs.
Notices of default on residential
mortgages (annual)
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
Foreclosure Activity in Santa Clara County,
2000 Q2 to 2009 Q2
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Figure 2.2 Source: DataQuick Real Estate News; ForeclosureRadar
aHomeownership: Related Data
• Housing cost burden asee p. 84
• Affordability for first-time homebuyers asee p. 86
• Annual home sales and prices asee p. 85
• New housing production asee p. 88
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