Sharp Increase In Bay Area Foreclosures

Oct. 18 (KGO) -- For a tenant it's the most baffling of notices. Ismael Kararakeh pays $1,400 dollars month-to-month for an apartment in San Jose. But he faces an uncertain future now that his landlord must sell the place in foreclosure.

ABC7's Wayne Freedman: "So do you know what you're going to do?"

Ismael Kararakeh: "No."

It takes just one glance at Bay Area numbers to see that foreclosures are way up in the last year. Foreclosures have more than doubled in San Francisco and Solano counties. Even in Santa Clara they've increased by more than half.

In many of these foreclosures experts say we are looking at the underside of all the fine print on lending deals. People have paid high prices for homes with adjustable rate mortgages. Those rates have gone up while the values of their homes have gone down.

Bill Alden, a mortgage broker in San Jose, blames both buyers and some realtors for over-exuberance and a lack of foresight.

Bill Alden: "The rates go up and two years later they can't make that $500 to $1,000 dollar increase. Then with 100 percent financing they're is no equity in their loans and they cannot get out of their loans."

Dan Carter, foreclosure market watcher: "What I saw is when stocks went down after 9/11 there was a tremendous move of money into the housing market."

Dan Carter keeps a closer watch on foreclosures than most people. He publishes a list of upcoming auctions for future investors. He says people may not want to believe it, but there has always been an element of gambling in real estate, and were seeing it.

Dan Carter, foreclosure market watcher: "Since there is no more retirements, the people were counting on their houses for retirements. Now that may not happen."

Further down the economic chain, in a San Jose apartment, Ismael Kararakeh has more immediate concerns. For him the foreclosure of his apartment building has nothing to do with investments and everything with keeping a roof over his head.

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