A report from Kieth Jurow. "The 2004-07 bubble era in U.S. housing markets was a time of utter madness. Much has been written about it, but almost nothing has been said about the craziest aspect of it – the cash-out re-financing lunacy. The second method was for the owner to refinance a second lien called a home equity line of credit (HELOC)."

"During the peak bubble years of 2004-06, roughly 20 million first liens were refinanced across the country.  According to the Freddie Mac report, more than 85% of all refinances were cash-outs in 2006. Since California was the center of the housing bubble in the U.S., it also became the epicenter for the cash-out refinancing lunacy."

"Roughly five times as many refinance loans were originated in California compared to mortgages for purchasing a home. Millions of Californians refinanced their first mortgage once, twice, even three times during the bubble years. They also refinanced with a cash-out HELOC while their home soared in value. Homeowners partied as if it would never end."

"By 2008, the housing market collapse in Los Angeles was in full swing. That year, 37,670 homes in Los Angeles County were foreclosed by mortgage servicers according to Property Radar.  Although foreclosures nationwide did not peak until 2010, the peak for Los Angeles was in 2008."

"As home prices showed no sign of leveling off in 2009 or early 2010, lenders and their servicers panicked. They decided that the bleeding might be stopped if they drastically reduced the number of repossessed properties placed on the active housing market. RealtyTrac had begun reporting as early as April 2009 that most foreclosed properties were being held off the market. They estimated that roughly 80,000 foreclosed properties in California had been deliberately kept off the market."

"What began in California spread nationwide. This table shows what servicers in major metros were doing with their foreclosed homes according to data provided by RealtyTrac. By mid-2010, Los Angeles County mortgage servicers had just under 30,000 properties in their foreclosure inventory. A mere 1,214 were actively for sale."

"Did this desperate strategy prevent home prices from falling further? Not at first. There were simply too many delinquent properties that had not yet been foreclosed. The solution was to sharply restrict the number of delinquent properties actually foreclosed. Early in 2012, the number of homes repossessed by the servicers began to plunge."

"Servicers realized that reducing foreclosures to a trickle had worked. By February 2013, repossessions plunged in LA County to a mere 310. For all of 2013, only 3,340 houses were foreclosed.  What servicers were doing went unreported by the media."

"Steven Lauffer was a professional staffer at the Federal Reserve Board. In 2013, he published a paper entitled “Equity Extraction and Mortgage Default.” Lauffer carefully laid out the case that mortgage defaults in Los Angeles County were caused by cash-out refinancing much more than by anything else."

"In a recent column, I discussed why the massive delinquency of bubble-era non-agency mortgages is a disaster waiting to happen. Comments by quite a few readers showed me they had a hard time understanding how fewer than 4 million mortgages could take down major housing markets."

"That is a fair objection. You need to understand that the problem is much greater than just the non-agency mortgages.  During the bubble years, a total of 28 million first and second liens were refinanced. Recall that roughly 80% of these were cash-out refinances."

"Modifying mortgages as an alternative to foreclosure just kicked the can down the road. It succeeded in bringing these delinquent homeowners into current status. Yet millions of them are re-defaulting on these modified mortgages. The number of re-defaults is increasing relentlessly around the U.S. Worse yet, many re-defaulters are on their second- or third mortgage modification."

"Which investors might be vulnerable? Owners of some mortgage REITs, owners of nearly any mortgage-backed securities (RMBS) originated by Ginnie Mae (FHA-insured mortgages), and more than a few hedge funds."

The Daily Gazette in New York. "Several Capital Region counties saw an uptick in foreclosure activity in 2018. Geri Pomerantz, managing attorney of Legal Aid's Foreclosure Prevention Project, said there are two ways of tallying foreclosure actions: Initial notices of delinquency issued to mortgage holders and cases that reach the court."

"'The important numbers are the delinquency numbers, and they’ve been increasing,' Pomerantz said. 'That data really tells you that people are in trouble.'"

"Legal Aid attorney Marlene Morales said: 'We’ve seen some people re-defaulting on their loans as interest rates step up.' Morales said expiration of the federal Home Affordable Modification Program is likely a factor in this, as it had provided assistance to those with a documented financial hardship."