Peter Viles of the L.A. Times blogs on Dataquick’s announcement that foreclosures are running 261% ahead of year ago levels.  If we just consider Notices of Default, the first stage in the foreclosure process, the volume is up a mere 124.9% from year-ago levels.

Although Dataquick is stating that we might be nearing a plateau, I think there’s quite a bit more pain left in store for California.  Loan quality did not improve as the bubble kept on growing and significant percentages of those loans were ones that will have re-setting interest rates.  When a homeowner is in a situation where home values have dropped to the point they can’t refinance and the monthly payment is rising to a level they can’t afford, that homeowner is stuck between selling the property with the bank taking a loss or the homeowner will eventually not be able to keep up the payments and enter foreclosure.

Proposed bailout plans might slow the rate of foreclosure, but eventually loan amounts will have to come in line with real estate prices and someone will be taking the loss between existing loan amounts and current real estate prices.  I’m expecting the “someone” taking a significant part of that loss will be the taxpayer.