'60 Minutes' visits 'Foreclosure Capital'

"60 Minutes" on Sunday reached into the housing downturn and produced a 15-minute segment on the housing downturn and foreclosure crisis.

You can view the video segment here. ("House of Cards")

Some interesting bits from this piece:

1. The Valdez family -- about halfway through -- look at the prospects of paying a higher mortgage payment on a house no longer worth the amount of the loan. The homeowners, who face a substantial monthly payment spike, consider whether it's better for them to walk away at this point. We touched on this theme last week (See, "Know when to fold 'em, Know when to walk away") -- that somehow the stigma of going into foreclosure isn't what it used to be and is changing the attitudes of homeowners in trouble.

2. One of the sources 60 Minutes interviewed discusses the symptoms of greed that were at play not only from the lenders, but also from borrowers. Borrowers in some cases took out loans for more than 100 percent of the value of the homes they were purchasing, he said. When this happens and borrowers end up in situations where they have nothing vested in their homes and no equity to gain, this fuels more of the "walk away now" attitude that may be spreading throughout troubled neighborhoods (See #1.)

3. The "Repo Bus" in Stockton, Calif., a city now known as the "Foreclosure Capital" of the U.S., was launched as a way to take groups of bargain-hunter buyers around the troubled city to view bank-owned properties. A Stockton agent interviewed for the segment said he believes the foreclosure cycle is only about 40 percent through at this point and that the city still has a long ways to go.

The picture in this blog post was taken in early January in Stockton. The home marketed by Collins Realty, at 9057 Barbaresco Circle, is an REO property that sold for $550,000 in July 2006, again for $365,500 in October 2007, and now carries a list price of $379,990.

For more on the crisis in Stockton and an inside look at how real estate agents there are working the market, see the Inman News three-part special report, "REOs: An Insider's View of Bank-Owned Properties." (Available to members)

Readers: Is it this bad in your markets?

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