A report from the LA Times. "Mortgage fraud continues to escalate in Southern California, FBI figures show, raising concerns of increased defaults and foreclosures as the housing market cools down. The FBI and industry experts say the trend reflects growing deceit by average borrowers who overstated their income, exaggerated their assets or hid their debts simply to qualify for a mortgage in the region's sky-high housing market."

"'There's more of the little guy running around — people committing fraud for housing,' said Ronda Heilig, the bureau's mortgage fraud program manager. A seven-county region from Orange County to San Luis Obispo County has seen a fourfold increase in suspicious loan activity since 2003."

"With prices flattening out or declining, those without sufficient equity could be forced to sell for a loss or even default on payments. That could accelerate any downturn in the market by swamping it with foreclosed and bargain-priced properties. 'This is the calm before the storm,' said Steve Smith, a Redlands appraiser."

"One lender recently compared 100 stated-income loans with the borrowers' tax returns and found that only 10 of the borrowers were telling the truth about their wages, according to a data firm. Sixty of the borrowers had exaggerated their incomes by more than 50%, according to the institute."

"In what might be a sign of trouble ahead, the HUD's Office of Inspector General said that it had audited 41 loans that had gone into default. All of the loans had been made by National City Corp., one of the biggest lenders in the country, and had been insured by HUD"

"In 20 of the loans, or just about half, the inspector general found 'errors and documentation omissions clearly contrary to prudent lending practices.' On one loan, for example, the borrower's previous address turned out to be nonexistent."

"On another, the borrower submitted two bank statements. The first month's closing balance didn't match the second month's opening balance, an indication that the documents might have been faked. A third borrower overstated his income, a fourth his assets."

From the Daily Democrat. "An increase in housing options and steady home prices have caused the tables to turn in the real estate industry. After nearly a decade of booming home prices and fast selling times in Yolo County, the market has quickly slowed down."

"'In terms of the market, we peaked in fall of 2005,' said (broker) Don Sharp in Woodland. 'Looking back it continued to escalate and escalate. But then prices started to suffer in 2006.'"

"Sharp said currently, there are 356 houses available in Woodland, that's more than three times the amount in 2004. Furthermore, the availability has caused builders and home owners to compete for buyers, which means better deals for those looking to buy."

"BG Tacket, a Woodland home seller, put his home up for sale earlier this month and since then has had a few people inquiring about it. He's not worried about the market because he priced his home competitively and feels it has enough character to stand out."

"'The market's back to normal and everyone is freaking out about it,' he said.' He said some of the biggest reasons why some houses aren't selling is because there's nothing in the house that stands out and its over priced. 'People are over-pricing to pay for the high Realtor commissions,' he said."

The Tracy Press. "For the first time in 15 years, the price of a home in Tracy fell from one year to the next. And with 'For Sale' signs spinging up all over the valley, buyers are feeling the market shift in their favor." "September figures show the median price for a single-family home in Tracy during the last six months has retreated from $546,000 to $538,000, and at least one real estate professional thinks prices could drop even further."

"'The last time this happened was in the early 1990s, right after the 1989 San Francisco earthquake,' said said Larry Rumbeck, president of the Central Valley Association of Realtors. 'We’re a bit late with the drop.'"

"He said sellers today are being more realistic with asking prices, while investors have left the market altogether."

"Rumbeck said factors such as lower gas prices and market-savvy buyers have conspired to limit Central Valley home sellers’ tendency to inflate prices. 'Negative press about housing prices, along with the fact that buyers are much more educated today, have contributed to a bubble burst,' he said."

"Today, many buyers are sitting back and holding on a month or two before purchasing a home, Rumbeck said. They’ve got a lot of options. The MLS shows there are 745 homes on the Tracy market, along with 259 foreclosures in the works and 113 repossessions. The glut has forced many homeowners wanting to sell to put their homes on the rental market and wait out the lull."

"Rents for a single-family house in Tracy are down far below $1,500, said (property manager) Barbara Johnson in Tracy, and renters paying that much right now opt to stay in the Bay Area and avoid the expense and time of a commute."

"'Prices were inflated drastically,' Rumbeck said. 'A house in Turlock that went for $180,000 in 2001 went for $380,000 in 2005.'"