Contrary to some claims, most of the foreclosures have occurred in modest homes, not sprawling "McMansions." Nearly 60 percent of the foreclosures occurred on properties with two or three bedrooms. Larger homes with at least four bedrooms accounted for less than one-third of all foreclosures.
The report makes several policy recommendations to improve housing finance, which include allowing principal reductions in loan modifications and lifting the ban on judicial modifications of principal residence mortgages by bankruptcy judges.
The CRL report comes as the California housing market suffered another setback last month with home sales experiencing the largest drop in two years.
Ending the homebuyer tax credit, which gave an $8,000 tax break to first-time homebuyers and relief of $6,500 to repeat purchasers, is being blamed for the precipitous drop in sales.