That site shows only six 4-bedroom, 2500+ sq. ft SFRs in the 92024 zip code that are in various states of foreclosure.
My understanding is that smaller residences were purchased by subprime borrowers. Those mortgages began to reset in earnest in 2006. The bigger residences in more posh areas like Encinitas were purchased by ‘prime’ borrowers using pay option ARMs. Those mortgages begin to reset in earnest this year. Thus, my guess is that we’ll see places like Encinitas start to take a hit later this year. And since these places were purchased using Pay Option ARMs, you’ll see massive mortgages as compared to the value of the associated homes.
A pretty decent article on Pay Option ARMs can be found here:
This LA Times article suggests that the second tide of the mortgage defaults are about to start. After reviewing data from mortgage industry data trackers, the author concludes that Pay Option ARM borrowers — “most of whom boast respectable and often top-tier credit scores and appear to have substantial incomes and home equity” – are having severe delinquency problems that are tied to the loose lending practices that inundated the sub-prime business. Pay Option ARM loans often were granted on the basis of stated income, not proof of a borrower’s income, giving rise to their nickname, “liar’s loans.”
